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Does the Belt and Road Initiative cause more troubled Chinese overseas investments?

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  • Jin, Gang
  • Shen, Kunrong
  • Jiang, Yue

Abstract

Using original linked firm-level panel data obtained from the China Global Investment Tracker and CSMAR dataset over the period 2005–2017, this paper investigates whether the Belt and Road Initiative (BRI) affected the probability of troubled Chinese overseas investments. We find that the probability of troubled Chinese overseas investments rose in the countries covered by the BRI. The finding is robust to various robustness checks. Furthermore, the European countries along the route witnessed the most troubled overseas investments associated with Chinese state-owned enterprises (SOEs), highlighting the hostility of some European partners towards Chinese SOEs. We provide evidence that increasing greenfield investment or cross-border merger and acquisition (M&A) and decreasing the number of new construction contracts by Chinese enterprises are more likely to cause trouble for overseas investments.

Suggested Citation

  • Jin, Gang & Shen, Kunrong & Jiang, Yue, 2021. "Does the Belt and Road Initiative cause more troubled Chinese overseas investments?," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 217-232.
    • Handle: RePEc:eee:reveco:v:72:y:2021:i:c:p:217-232
    DOI: 10.1016/j.iref.2020.11.016
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    Cited by:

    1. Hangtian Xu & Fuqiang Yang & Wenzhuo Zheng, 2024. "The effectiveness of government incentives for outward investment: The case of China's Belt and Road Initiative," Contemporary Economic Policy, Western Economic Association International, vol. 42(3), pages 498-523, July.
    2. Wang, Changjian & Miao, Zhuang & Chen, Xiaodong & Cheng, Yu, 2021. "Factors affecting changes of greenhouse gas emissions in Belt and Road countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 147(C).
    3. Sidong Zhao & Yiran Yan & Jing Han, 2021. "Industrial Land Change in Chinese Silk Road Cities and Its Influence on Environments," Land, MDPI, vol. 10(8), pages 1-30, July.
    4. Ouyang, Shanshan & Li, Yanxi & Wu, Haowen & Zhao, Heng & Xu, Runxiang, 2023. "Structure and evolution of the greenfield FDI network along the belt and road," Research in International Business and Finance, Elsevier, vol. 64(C).
    5. Yameng Wang & Apurbo Sarkar & Linyan Ma & Qian Wu & Feng Wei, 2021. "Measurement of Investment Potential and Spatial Distribution of Arable Land among Countries within the “Belt and Road Initiative”," Agriculture, MDPI, vol. 11(9), pages 1-23, September.
    6. Wang, Hui & Si, Ieongcheng & Chen, Zhihua, 2024. "Does the Belt and Road Initiative promote China and the countries along the route to reconstruct the global value chain? Evidence from value-added trade," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 63-83.

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    More about this item

    Keywords

    Belt and road initiative; Trouble probability; Overseas investment; Difference-in-differences estimation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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