When Repressed Civil Society Attracts Foreign Investors: The Dual Dimensions of Chinese Foreign Direct Investment in Southeast Asia

What is the relationship between Chinese foreign direct investment (FDI) and human rights in host countries? As China has emerged as one of the world’s leading international investors, examining the determinants of FDI inflows from a non-democratic and non-Western power offers valuable insights into a central theoretical puzzle: Does repression attract FDI? This paper engages with theories on FDI and human rights, focusing on the interplay between repression, political stability, and natural resource rents and how these factors shape the investment preferences of foreign actors. The central hypotheses—stability maintenance and extractive repression—propose that countries exhibiting higher political stability and greater reliance on natural resource rents are more likely to attract Chinese outward FDI. Recipient governments may be incentivized to employ coercive measures to foster a stable investment climate. Using regression analysis covering the period from 2003 to 2023, alongside two country case studies—Cambodia and Indonesia—this study investigates the conditions under which human rights conditions in host countries are associated with Chinese FDI inflows. Most importantly, the findings reveal two distinct dimensions of Chinese FDI, illustrating how it can be drawn to repressive recipient countries in rentier and non-rentier state contexts. By shedding light on the dynamics of Chinese investment in Southeast Asia, this paper contributes to the broader literature on China’s global engagement and FDI.