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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
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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

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Supplementary material: Link

Stone et al. Dataset

Dataset

https://doi.org/10.7910/DVN/QSJXLL
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Stone et al. supplementary material

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