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Chinese Power and the State-Owned Enterprise

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  • Stone, Randall W.
  • Wang, Yu
  • Yu, Shu

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.

Suggested Citation

  • Stone, Randall W. & Wang, Yu & Yu, Shu, 2022. "Chinese Power and the State-Owned Enterprise," International Organization, Cambridge University Press, vol. 76(1), pages 229-250, January.
    • Handle: RePEc:cup:intorg:v:76:y:2022:i:1:p:229-250_9
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    Cited by:

    1. Luo, Lianfa & Cheng, Zhiming & Ye, Qingqing & Cheng, Yanjun & Smyth, Russell & Yang, Zhiqing & Zhang, Le, 2023. "Nonmonetary Awards and Innovation: Evidence from Winning China's Top Brand Contest," GLO Discussion Paper Series 1345, Global Labor Organization (GLO).
    2. Yu Wang & Randall W. Stone, 2023. "China visits: a dataset of Chinese leaders’ foreign visits," The Review of International Organizations, Springer, vol. 18(1), pages 201-225, January.
    3. Calabrese, Linda & Wang, Yuan, 2023. "Chinese capital, regulatory strength and the BRI: A tale of ‘fractured development’ in Cambodia," World Development, Elsevier, vol. 169(C).
    4. Beibei Hu & Qiao Luan & Xue Meng & Kai Wang, 2023. "Media Inclination and Outward Foreign Direct Investment: Evidence from Chinese Firms," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(6), pages 134-155, November.

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