<p>This study examines the determinants of China’s outward foreign direct investment in selected 33 Asian countries for the period to 2003–2023. This study makes an important contribution to the existing literature by incorporating the role of economic freedom as a novel determinant of China’s OFDI, a factor that has received limited attention in prior literature. This study employed the Arellano–Bond Dynamic model and Dynamic Common Correlated panel estimation to control cross-sectional dependency and the issue of endogeneity among the selected panel. Similarly, for robustness and consistency across models—this study also used the fully modified least squares (FMOLS) and Conical Cointegration (CCR) model. The empirical findings reveal that trade openness (lgTO), GDP per capita (lgGDP), Exchange Rate (lgEXR), and availability of natural resources (lgNR) significantly and positively improved China’s OFDI in the selected Asian countries. Labor cost significantly and negatively impacts China’s OFDI in Asian countries. Finally, both institutional quality and economic freedom have a pronounced impact on China OFDI in Asian countries. To attract China’s OFDI, Asian countries should improve both institutions and economic freedom.</p> Graphical abstract <p></p>