Navigating trade barriers: How anti-dumping and countervailing policies affect outward foreign direct investment of Chinese solar photovoltaic firms

In the context of rising global trade protectionism, Chinese photovoltaic (PV) firms face increasing anti-dumping and countervailing (ADCV) trade barriers. Outward foreign direct investment (OFDI) has become a crucial strategy to overcome these barriers and expand into overseas markets. Using data from Chinese listed firms between 2007 and 2016, this study empirically examines the impact of ADCV policies on PV firms’ OFDI using a multi-period difference-in-differences (DID) approach. The findings show that (1) ADCV measures significantly stimulate OFDI, confirming the “crossing trade barriers effect”; (2) Mechanism analysis identifies three pathways: export barriers push PV firms to use OFDI to bypass trade restrictions; ADCV policies increase market concentration, with stronger firms leveraging OFDI to mitigate negative effects, while weaker firms reduce market share or exit; and PV firms use greenfield investments and cross-border M&A to overcome trade barriers, with M&A being a more efficient strategy; (3) Heterogeneity analysis reveals that firms with higher productivity, those more dependent on external markets, eastern enterprises, and firms located in Belt and Road provinces are more likely to enhance global competitiveness via OFDI. This study offers insights into how Chinese PV firms can navigate trade barriers and provides policy recommendations to optimize internationalization strategies.