Hostname: page-component-78c5997874-j824f Total loading time: 0 Render date: 2024-11-19T00:29:07.550Z Has data issue: false hasContentIssue false
  • English
  • Français

Chinese Power and the State-Owned Enterprise

Published online by Cambridge University Press:  05 August 2021

Randall W. Stone Open the ORCID record for Randall W. Stone [Opens in a new window] ,
Yu Wang Open the ORCID record for Yu Wang [Opens in a new window]  and
Shu Yu
Get access

Abstract

China has become a leading source of outward foreign direct investment (FDI), and the Chinese state exercises a unique degree of influence over its firms. We explore the patterns of political influence over FDI using a comprehensive firm-level data set on Chinese outward FDI from 2000 to 2013. Using six country-level measures of affinity for China, we find that state-owned and globally diversified firms appear to conform most closely to official guidance. Official investment directives and state visits link investments to state policies; Taiwan recognition and Dalai Lama meetings anchor our political interpretations; and UN General Assembly voting and temporary UN Security Council membership suggest that this intervention may be systematic. The results are robust to country, year, and sector fixed effects, and most do not hold for private or small firms. The results suggest that China uses FDI by prominent state-owned enterprises as an instrument to promote its foreign policy.

Keywords

ChinaFDIstate-owned enterprisesleader visitsTaiwanDalai LamaUN votingUN Security Council
Type
Research Note
Information
International Organization , Volume 76 , Issue 1 , Winter 2022 , pp. 229 - 250
Copyright
Copyright © The IO Foundation 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bailey, Michael A., Strezhnev, Anton, and Voeten, Erik. 2017. Estimating Dynamic State Preferences from United Nations Voting Data. Journal of Conflict Resolution 61 (2):430–56.CrossRefGoogle Scholar
Beaulieu, Eugene, Lian, Zeng, and Wan, Shan. 2020. Presidential Marketing: Trade Promotion Effects of State Visits. Global Economic Review 49 (3):309–27.CrossRefGoogle Scholar
Brautigam, Deborah. 2009. The Dragon's Gift: The Real Story of China in Africa. Oxford University Press.Google Scholar
Brautigam, Deborah, and Xiaoyang, Tang. 2012. Economic Statecraft in China's New Overseas Special Economic Zones: Soft Power, Business or Resource Security? International Affairs 88 (4):799–816.CrossRefGoogle Scholar
Buckley, Peter, Jeremy Clegg, L., Voss, Hinrich, Cross, Adam R., Liu, Xin, and Zheng, Ping. 2018. A Retrospective and Agenda for Future Research on Chinese Outward Foreign Direct Investment. Journal of International Business Studies 49:4–23.CrossRefGoogle Scholar
Carter, David B., and Stone, Randall W.. 2015. Multilateralism and Democracy: The Case of Vote Buying in the United Nations General Assembly. International Organization 68 (1):1–33.CrossRefGoogle Scholar
Chapman, Terrence. 2011. Securing Approval: Domestic Politics and Multilateral Authorization for War. University of Chicago Press.CrossRefGoogle Scholar
Chen, Chunlai. 2015. Determinants and Motives of Outward Foreign Direct Investment from China's Provincial Firms. Transnational Corporations 23 (1):1–28.CrossRefGoogle Scholar
Chen, Maggie Xiaoyang, and Lin, Chuanhao. 2020. Geographic Connectivity and Cross-border Investment: The Belts, Roads and Skies. Journal of Development Economics 146:102469.CrossRefGoogle Scholar
Chen, Wenjie, Dollar, David, and Tang, Heiwai. 2018. Why Is China Investing in Africa? Evidence from the Firm Level. World Bank Economic Review 32 (3):610–32.Google Scholar
Chen, Wenjie, and Tang, Heiwai. 2014. The Dragon Is Flying West: Micro-level Evidence of Chinese Outward Direct Investment. Asian Development Review 31 (2):109–40.CrossRefGoogle Scholar
Cheung, Yinwong, de Haan, Jakob, Qian, Xingwang, and Yu, Shu. 2014. The Missing Link: China's Contracted Engineering Projects in Africa. Review of Development Economics 18 (3):564–80.CrossRefGoogle Scholar
Cuervo-Cazurra, Alvaro, Inkpen, Andrew, Musacchio, Aldo, and Ramaswamy, Kannan. 2014. Governments as Owners: State-Owned Multinational Firms. Journal of International Business Studies 45:919–42.CrossRefGoogle Scholar
Davis, Chirstina, Fuchs, Anreas, and Johnson, Kristina. 2019. State Control and the Effects of Foreign Relations on Bilateral Trades. Journal of Conflict Resolution 63 (2):405–38.CrossRefGoogle Scholar
Dreher, Axel, Nunnenkamp, Peter, and Thiele, Rainer. 2011. Are “New” Donors Different? Comparing the Allocation of Bilateral Aid Between non-DAC and DAC Donor Countries. World Development 39 (11):1950–68.CrossRefGoogle Scholar
Dreher, Axel, Fuchs, Andreas, Parks, Brad, Strange, Austin M., and Tierney, Michael J.. 2018. Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa. International Studies Quarterly 62 (1):182–94.CrossRefGoogle Scholar
Dreher, Axel, and Jensen, Nathan M.. 2013. Country or Leader? Political Change and UN General Assembly Voting. European Journal of Political Economy 29:183–96.CrossRefGoogle Scholar
Fang, Songying. 2008. The Informational Role of International Institutions and Domestic Politics. American Journal of Political Science 52 (2):304–21.CrossRefGoogle Scholar
Friedberg, Aaron L. 2011. A Contest for Supremacy: China, America, and the Struggle for Mastery in Asia. Norton.Google Scholar
Fuchs, Andreas, and Klann, Nils-Hendrik. 2013. Paying a Visit: The Dalai Lama Effect on International Trade. Journal of International Economics 91 (1):164–77.CrossRefGoogle Scholar
Goddard, Stacie E. 2018. Embedded Revisionism: Networks, Institutions, and Challenges to World Order. International Organization 72 (4):763–97.CrossRefGoogle Scholar
Holmstrom, Bengt, and Milgrom, Paul. 1991. Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design. Journal of Law, Economics, and Organization 7 (Special):24–52.CrossRefGoogle Scholar
Ikenberry, John G. 2011. Liberal Leviathan: The Origins, Crisis, and Transformation of the American World Order. Princeton University Press.Google Scholar
Johnston, Alastair Iain. 2019. China in a World of Orders: Rethinking Compliance and Challenge in Beijing's International Relations. International Security 44 (2):9–60.CrossRefGoogle Scholar
Kastner, Scott, and Saunders, Phillip. 2012. Is China a Status Quo or Revisionist State? Leadership Travel as an Empirical Indicator of Foreign Policy Priorities. International Studies Quarterly 56 (1):163–77.CrossRefGoogle Scholar
Kersting, Erasmus, and Kilby, Christopher. 2014. Aid and Democracy Redux. European Economic Review 67:125–43.CrossRefGoogle Scholar
Knoerich, Jan, and Urdinez, Francisco. 2019. Contesting Contested Multilateralism: Why the West Joined the Rest in Founding the Asian Infrastructure Investment Bank. Chinese Journal of International Politics 12 (3):330–70.CrossRefGoogle Scholar
Krasner, Stephen D. 1999. Sovereignty: Organized Hypocrisy. Princeton University Press.CrossRefGoogle Scholar
Kuziemko, Ilyana, and Werker, Eric. 2006. How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations. Journal of Political Economy 114 (5):905–30.CrossRefGoogle Scholar
Lin, Faqin, Hu, Cui, and Fuchs, Andreas. 2019. How Do Firms Respond to Political Tensions? The Heterogeneity of the Dalai Lama Effect on Trade. China Economic Review 54 (1):73–93.CrossRefGoogle Scholar
Lin, Faqin, Yan, Wenshou, and Wang, Xiaosong. 2017. The Impact of Africa China's Diplomatic Visits on Bilateral Trade. Scottish Journal of Political Economy 64 (3):310–26.CrossRefGoogle Scholar
Lipscy, Phillip Y. 2017. Renegotiating the World Order: Institutional Change in International Relations. Cambridge University Press.CrossRefGoogle Scholar
Mansfield, Edward D., and Bronson, Rachel. 1997. Alliances, Preferential Trading Arrangements, and International Trade. American Political Science Review 91 (1):94–107.CrossRefGoogle Scholar
Monson, Jamie. 2011. Africa's Freedom Railway: How a Chinese Development Project Changed Lives and Livelihoods in Tanzania. Indiana University Press.Google Scholar
Nitsch, Volker. 2007. State Visits and International Trade. World Economy 30 (12):1797–816.CrossRefGoogle Scholar
Norris, William. 2016. Chinese Economic Statecraft: Commercial Actors, Grand Strategy, and State Control. Cornell University Press.Google Scholar
Sauvant, Karl P., and Chen, Victor Zitian. 2014. China's Regulatory Framework for Outward Foreign Direct Investment. China Economic Journal 7 (1):141–63.CrossRefGoogle Scholar
Simmons, Beth A. 2009. Mobilizing for Human Rights: International Law in Domestic Politics. Cambridge University Press.CrossRefGoogle Scholar
Stone, Randall W. 2011. Controlling Institutions: International Organizations and the Global Economy. Cambridge University Press.CrossRefGoogle Scholar
Strange, Austin M., Dreher, Axel, Fuchs, Andreas, Parks, Bradley, and Tierney, Michael J.. 2017. Tracking Underreported Financial Flows: China's Development Finance and the Aid-Conflict Nexus Revisited. Journal of Conflict Resolution 61 (5):935–63.CrossRefGoogle Scholar
Struver, Georg. 2016. What Friends Are Made Of: Bilateral Linkages and Domestic Drivers of Foreign Policy Alignment with China. Foreign Policy Analysis 12 (2):170–91.Google Scholar
United Nations Conference on Trade and Development. N.d. Foreign Direct Investment: Inward and Outward Flows and Stock, Annual. UNCTADSTAT. Available at <unctadstat.unctad.org>..>Google Scholar
Vernon, Raymond. 1971. Sovereignty at Bay: The Multinational Spread of US Enterprises. International Executive 13 (4):1–3.CrossRefGoogle Scholar
Visser, Robin. 2019. The Effect of Diplomatic Representation on Trade: A Panel Data Analysis. World Economy 42 (1):197–225.CrossRefGoogle Scholar
Voeten, Eric. 2000. Clashes in the Assembly. International Organization 54 (2):185–215.CrossRefGoogle Scholar
Voeten, Eric. 2005. The Political Origins of the UN Security Council's Ability to Legitimize the Use of Force. International Organization 59 (3):527–57.CrossRefGoogle Scholar
Vreeland, James Raymond, and Dreher, Axel. 2014. The Political Economy of the United Nations Security Council: Money and Influence. Cambridge University Press.Google Scholar
Wang, Yu. 2018. The Political Economy of Joining the AIIB. Chinese Journal of International Politics 11 (2):105–30.CrossRefGoogle Scholar
Wellhausen, Rachel L. 2015. The Shield of Nationality: When Governments Break Contracts with Foreign Firms. Cambridge University Press.Google Scholar
Yu, Shu, Qian, Xingwang, and Liu, Taoxiong. 2019. Belt and Road Initiative and Chinese Firms’ Outward Foreign Direct Investment. Emerging Markets Review 41 (C):1–20.CrossRefGoogle Scholar
Zhao, Quansheng. 1997. Chinese Foreign Policy in the Post-Cold War Era. World Affairs 159 (3):114–29.Google Scholar
Supplementary material: Link

Stone et al. Dataset

Dataset

https://doi.org/10.7910/DVN/QSJXLL
Link
Supplementary material: PDF

Stone et al. supplementary material

Stone et al. supplementary material

Download Stone et al. supplementary material(PDF)
PDF 590.8 KB