Modern Economics & Management Forum

In the era of global digitalization, the digital economy of host countries has become a key driver of China’s outward foreign direct investment (OFDI). Drawing on China’s investment flows to 100 countries from 2013 to 2021, this study employs an extended gravity model incorporating the TIMG Digital Economy Index and its four dimensions—technology, infrastructure, market, and governance. The results show that host countries’ digital economy levels significantly enhance China’s OFDI, with the findings remaining robust under variable substitution and sub-sample regressions. Among the four dimensions, digital technology exerts the strongest marginal effect, followed by infrastructure, market, and governance. Furthermore, high-income economies and Belt and Road countries demonstrate greater attractiveness for Chinese capital due to the combined effects of digital dividends and policy coordination. Overall, the expansion of host countries’ digital economies not only enlarges the scale of China’s OFDI but also improves its locational distribution.