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China’s overseas infrastructure investment: The impact of host country sovereign risk post-covid-19

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  • Ighedosa, Jeffrey
  • Bo, Hong
  • Murinde, Victor

Abstract

We investigate the impact of host country sovereign risk on China’s overseas infrastructure investment (OII) based on 110 host countries over the period 2013–2024. We treat the Covid-19 pandemic as a significant event that carries both common shock effects for host countries and an idiosyncratic shock effect for China’s OII. The Difference-in-Differences (DID) results show that countries with higher sovereign risk receive lower infrastructure investment from China post-Covid-19 compared with lower sovereign risk countries. Moreover, both the average size and the number of China’s new infrastructure projects are lower in higher sovereign risk countries post-Covid-19. We also find that host country natural resources and geopolitical alignment with China mitigate the negative impact of host country sovereign risk on China’s OII. Our results suggest that risk management has become an important concern for Chinese infrastructure investors post-Covid-19, but China’s OII is still driven by a combination of economic and non-economic considerations.

Suggested Citation

  • Ighedosa, Jeffrey & Bo, Hong & Murinde, Victor, 2026. "China’s overseas infrastructure investment: The impact of host country sovereign risk post-covid-19," Journal of International Money and Finance, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:jimfin:v:165:y:2026:i:c:s0261560626000604
    DOI: 10.1016/j.jimonfin.2026.103575
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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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