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Chinese Outwards Mercantilism – the Art and Practice of Bundling

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  • Joshua Aizenman
  • Yothin Jinjarak
  • Huanhuan Zheng

Abstract

The Global Financial Crisis (GFC) brought to the fore the limits of the Chinese export led-growth strategy and the need for Chinese rebalancing of its international business approaches. Our paper takes stock of what may be the new chapter of Chinese outward-mercantilism, which aims at securing a higher rate of returns on its net foreign asset position, leveraging its success in manufacturing exports, natural resource imports and RMB internationalization. Using micro-level project data and macroeconomic covariates, we find positive association of Chinese trade and financial flows with China’s outward direct investment (ODI). The relationship is stronger for ODI originated from the Chinese state-owned enterprises, and strengthened by the provision of RMB swap-line agreements with China’s trading partners. The evidences support the conjecture that Chinese ODI is bundled to trade and financial linkages with its investment and trading partners.

Suggested Citation

  • Joshua Aizenman & Yothin Jinjarak & Huanhuan Zheng, 2015. "Chinese Outwards Mercantilism – the Art and Practice of Bundling," NBER Working Papers 21089, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21089
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    Cited by:

    1. Joyce, Joseph P., 2019. "Partners, not debtors: The external liabilities of emerging market economies," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 320-337.
    2. Jackie M. L. Chan & Huanhuan Zheng, 2022. "FDI on the move: cross-border M&A and migrant networks," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(3), pages 947-985, August.
    3. Mengheng Liu & Xingwang Qian, 2021. "Provincial Interdependence and China’s “Irrational” Outward Foreign Direct Investment," Open Economies Review, Springer, vol. 32(1), pages 153-181, February.
    4. Pareja-Alcaraz, Pablo, 2017. "Chinese investments in Southern Europe's energy sectors: Similarities and divergences in China's strategies in Greece, Italy, Portugal and Spain," Energy Policy, Elsevier, vol. 101(C), pages 700-710.
    5. Gaowang Wang & Heng-fu Zou, 2018. "The Effects of Macroeconomic Policies in a Mercantilist Economy," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 13(2), pages 171-195, June.
    6. Juliana Yu Sun & Huanhuan Zheng, 2024. "Cross‐border technology investments in recession," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(1), pages 297-330, February.
    7. Gete, Pedro & Melkadze, Givi, 2020. "A quantitative model of international lending of last resort," Journal of International Economics, Elsevier, vol. 123(C).
    8. Tong, Tong & Chen, Xiaoyue & Singh, Tarlok & Li, Bin, 2022. "Corporate governance and the outward foreign direct investment: Firm-level evidence from China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 962-980.

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    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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