China experienced fast and large growth in terms of outward foreign direct investment (OFDI) in the last two decades. According to UNTCAD, the proportion of China's OFDI position to worldwide FDI position has increased by 13.64 times, from 0.36% in 2003 to 4.91% in 2016 (Figure 1a). The average annual growth rate of China's OFDI position was 31.8% during this period, which is around 2.3 times of its GDP growth rate (Figure 1b). The World Investment Report (2018) documents that China was the third largest overseas investor in the world, following the U.S. and Japan, in 2017.Given the importance of China in global OFDI, which factor determines the destination choice of China's OFDI is an important question in the literature. One strand of literature emphasises the role of the natural resource endowment of the host country (e.g., Buckley et al., 2007;Kolstad & Wiig, 2012;Yang et al., 2018). This argument seems plausible as shown in the industrial decomposition of China's OFDI in Table 1. Mining industry is the industry receiving the largest fraction of China's OFDI. 1 Such a view, however, faces two challenges in recent years. One comes from the fact that the Chinese OFDI destinations have been gradually switching from developing economies towards 1 For instance, in 2003, the share of mining sector was 18% (30.34% when excluding Hong Kong in 2008). When we restrict our focus to Asia, which is the largest recipient of China's OFDI, mining again is the sector with a substantial fraction of China's OFDI (see Table A1). 2 Hanemann and Rosen (2012) document that the focus of China's OFDI has shifted from mainly being natural resourceseeking investments in Asia, Latin America and Africa towards being assets in the European Union, in particular, those heavily hit by the debt crisis, such as Greece, Portugal and Spain. Dreger et al. (2017) also document the rising trend of China's OFDI in the European Union. 3 These regions are typically viewed as offshore financial centres and tax heavens. It has widely been accepted that capital | 741 FENG Et al.

Using a country-level panel data set of China's outward foreign direct investment (OFDI) during 2003-2015, we find that China increases its direct investment in an economy endowed with natural resources, which increases the exports of the resources to China. Facilitated by the industry-level data between 2003 and 2008, we further show that the increase of China's OFDI in the economies abundant in natural resources would boost the output of Chinese industries which use the resources intensively but shrink the industries that are less intensive in the resources. These findings are consistent with the Rybczynski theorem and suggest that China's OFDI increases its domestic supply of natural resources.