The Politics of Latin America’s Investment and Other Links with China: Contextualizing the Region’s Cash Chasing while Racking Richer Research Rewards

There are three positions about the impact of outward foreign direct investment (FDI) from China on the policies of Latin American and Caribbean (LAC) countries: the “Wealth is Power” camp, which associates political power with Chinese economic lures; the “Conditionalist” camp, which contends the international and domestic economic and political context determines the specific political effect of Chinese outward FDI (OFDI); and the “Politics is Power” camp, which believes no dramatic political changes have resulted from the economic stimuli of Chinese OFDI (COFDI) and associated economic lures. Case studies herein on Brazil and China, Argentina and China, Ecuador and China, and the Caribbean and China support the Conditionalist camp, albeit to differing degrees and for different reasons. Case studies herein on COFDI in Argentina and in Colombia also deepen our knowledge about the drivers of COFDI. They challenge those asserting that COFDI in LAC is driven purely by political motives. This piece also reviews and critiques the state of the literature on COFDI in LAC and suggests a pathway for moving to the next level. It specifically recommends researchers work to cumulate knowledge by asking similar kinds of questions across cases, exploit theory, and work on variable conceptualization and operationalization.

     

Chinese Foreign Direct Investment and Argentina: Unraveling the Path

This article explores the political economy of Chinese outward foreign direct investment (FDI) in Argentina during the reign of Nestor Kirchner and Cristina Fernandez. Among other things, it contemplates possible links between Chinese outward FDI (OFDI) volumes and Argentina’s domestic and foreign policies. It also analyses a mixture of successful and unsuccessful Chinese investment cases in the agricultural, chemical, and banking sectors in order to engage the debate about the drivers of Chinese OFDI (COFDI), with some stressing business and economic factors and others emphasizing the primacy of political factors. In regards to the former, my study shows that Argentine policymakers did not offer special accommodations to Chinese investors despite the pro-China proclivities of Argentine leaders and their country’s economic and political need for China. Moreover, at the local level, Argentine politics actually proved to be an obstacle to successful Chinese deals. As for the latter issue, Chinese companies were not inclined to invest in Argentina because of the China stance of the Argentine government, but rather because they saw opportunities to exploit fertile agricultural soil, special tax regimes for investors, and opportunities to integrate into global value chain. My findings have a number of important theoretical and policy implications.

     

Chinese MNCs as China’s New Long March: A Review and Critique of the Western Literature

Chinese outward foreign direct investment (COFDI) has captured the imagination of international business academics, journalists, and analysts of Chinese foreign economic policy. While these students of COFDI have added greatly to our knowledge, they have not adequately considered the politico-economy of COFDI. Specifically, they have not sufficiently evaluated the degree to which COFDI is driven by political versus economic considerations, the extent to which political considerations influence the overseas operations of Chinese multinational corporations (MNCs), or the political ramifications of COFDI for host countries, international institutions, or China’s interactions with third parties. Reviewing the Western literature, this article provides useful background information about COFDI, distills two general schools of thought about the politico-economy of COFDI—i.e., the “Beijing as Puppeteer” camp and the “Business of Business is Business” camp, and highlights a number of shortcomings with each. As well, it suggests a number of ways in which the extant literature can move forward and makes clear the importance of tracking the development of Chinese MNCs.     

Informal institutions and foreign investment in China

During the reform era, China has been very successful in attracting foreign direct investment (FDI) for its economic development. That this has taken place despite a rather weak legal system in China challenges conventional institutional theories, which emphasize the centrality of effective state institutions to economic development and international cooperation. This article suggests that the solution to the puzzle lies in the informal institutions underlying FDI development in China. On the basis of extensive interviews in the mid- and late 1990s, I find that networks of personal connections (guanxi), which are pervasive in Chinese society, have played a major role in facilitating FDI flows to China. They have done so by complementing and compensating for the weak Chinese legal system. This article dispels a number of misconceptions about the nature of guanxi, discusses its relationship with friendship, bribery, and social capital, and analyzes the conditions underlying the transnationalization of guanxi networks. It concludes with some important caveats to the major thesis and a discussion of possible future scenarios of institutional development in China.     

The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements?

The flow of foreign direct investment into developing countries varies greatly across countries and over time. The political factors that affect these flows are not well understood. Focusing on the relationship between trade and investment, we argue that international trade agreements—GATT/WTO and preferential trade agreements (PTAs)—provide mechanisms for making commitments to foreign investors about the treatment of their assets, thus reassuring investors and increasing investment. These international commitments are more credible than domestic policy choices, because reneging on them is more costly. Statistical analyses for 122 developing countries from 1970 to 2000 support this argument. Developing countries that belong to the WTO and participate in more PTAs experience greater FDI inflows than otherwise, controlling for many factors including domestic policy preferences and taking into account possible endogeneity. Joining international trade agreements allows developing countries to attract more FDI and thus increase economic growth.     

Do the “Dragon’s Gifts” Improve China’s National Image? An Empirical Analysis of the Economic Relations and Public Perceptions of China in Africa

Using a multivariate framework and the most recently available data that include numerous African countries, this investigation has produced the first extensive statistical evaluation of China’s image in Africa based on China’s various economic relations with Africa, including aid, trade, FDI and contracts. We find that China’s economic development assistance, contracts, and to some degree, trade with African countries contribute to a positive image of China in Africa. In addition, we find that people in African countries of a smaller population, poorer livelihood, less open economy, and better governance tend to have positive views of China’s political and economic influence. With the implementation of the Belt and Road Initiative, Chinese economic activities in recipient countries have been increasing. The implications of this research shed light on how BRI may be received in the host countries and the likelihood of its success or failure.

     

Brazil’s Samba with China: Economics Brought Them Closer,but Failed to Ensure their Tango

Journal of Chinese Political Science - There are many who expect China’s rising foreign direct investment (FDI) in, exports to, and economic collaboration with Latin American countries will...     

China's defence industries

Abstract

The implementation of foreign direct investment (FDI) policies in China shows that domestic considerations were not the only factors shaping the course of China's opening up to the world economy. Foreign response was often taken into account as the Chinese government felt its way through the process of reform. Focusing on Japanese FDI in China, this article explores the liberalization of China's FDI regime and traces the impact of China's negotiations with and accommodation to pressure from foreign business and governments.     

The influence of foreign direct investment on contracting confidence in developing countries

This paper examines whether foreign direct investment (FDI) influences confidence in commercial contracts in developing countries. While the research on how host countries’ policy environments encourage FDI inflows has flourished, scholars have paid less attention to how the policy environment and local actors’ beliefs might, in turn, be affected by FDI. This is surprising because multinational enterprises are well‐recognized political and economic actors across the world. We expect that their increasing economic salience will influence the policy environments in which they function. By employing an innovative measure of property rights protection – contract‐intensive money – we examine how foreign direct investment influences host countries’ contract‐intensive money ratio in a large panel time series of both developed and developing countries from 1980 to 2002. Our analysis suggests that higher levels of FDI inflows are associated with greater confidence in commercial contracts and, by extension, the protection of property rights in developing countries.     

Can China’s Economic Statecraft Win Soft Power in Africa? Unpacking Trade,Investment and Aid

Boosting China’s soft power is an important goal of Chinese economic statecraft in Africa. However, African opinions of China – in particular those of ordinary people – are understudied, and existing evidence suggests African viewpoints on China are highly varied and polarized. On the one hand, China’s growing economic linkages are welcomed by Africans as an important alternative to traditional partners, and a vital source of funding for development needs. On the other hand, Africans see China as a source of poor-quality products and an exploitative threat to local markets. How can scholars understand these polarized opinions on China? Using data from the Afrobarometer Round 6 survey (2016), this article aims to untangle African perceptions of Chinese economic engagement through unpacking the distinctive effects of China’s three tools of economic statecraft: trade, foreign direct investment, and aid. Analyses of Chinese influence frequently package these three modes of engagement together, but in practice they have very different consequences for China’s soft power. Negative perceptions of China among African citizens are primarily associated with trade-related issues. China’s investment and aid, on the other hand, generally make a positive contribution to Chinese soft power in Africa. By highlighting the contrasting effects of different instruments of economic engagement, this analysis contributes insight into Sino-African relations and China’s wider economic diplomacy.

     

Malaysia's new economic policy and the global economy: The evolution of ethnic accommodation

Abstract

Developing countries commonly must deal not only with issues of economic development, but also with the problems associated with a multi‐ethnic population. Most analyses of ethnic programs, however, focus on the domestic political economy and fail to appreciate the importance of international factors. In this essay, I note that Malaysia's New Economic Policy (NEP) and its successors have been affected not only by the domestic ethnic situation but also by the global economy. Furthermore, I argue that current international pressures and constraints have forced a re‐evaluation of the NEP in the past decade. While a concern for ethnic factors is by no means absent from the policy‐making process today, ethnic concerns are now overshadowed by the realities of the international economic order and the government's realization that ethnic accommodation can only be successful within the confines of an outward‐looking, expanding economy.     

China in the dynamic Asia‐Pacific region

The Chinese economy has experienced spectacular growth in recent years. Despite its huge trade and investment potential, China today remains an insignificant player in the world economy. But the emerging Chinese economy has already profoundly changed the pattern of trade and investment flows in the Asia‐Pacific region. Over the years, the Chinese economy has been steadily integrated with its neighbouring economies of Japan, the NIEs and ASEAN, which are all well known for their dynamic growth. The growing integration of the Chinese economy, with its huge economic potential, into the Asia‐Pacific region will enhance the region's prospects for further growth. Most Asia‐Pacific economies take a positive view of China's increasing economic involvement in the region as a new source of economic opportunity. It is in such a regional rather than the global context that the immediate effects of China's recent economic upsurge should be gauged.     

Chinese and Japanese investment in Southeast and South Asia: case studies of the electronics and automobile industries

Abstract

This article uses extensive fieldwork data to focus on the question of how Chinese and Japanese companies are competing in neighboring countries of Asia, and what economic forces will shape their future growth in the region. It begins by briefly discussing the history of Chinese and Japanese investment in the South and Southeast Asian regions. It traces the development of Japanese overseas investment policies, as well as China's more recent ‘Going Out’ government program to encourage overseas flows of capital. It then builds on prior political economy work as it uses case study focuses, with primary data based on the author's fieldwork research in several nations of Southeast Asia and in India, of the two key sectors of automobiles and electronics. It compares and contrasts the investment strategies of companies from each country, as well as the successes and failures of investments in the industries. It finds that Japanese companies’ advantages lie in industries utilizing advanced technology and management skills. Though the Japanese continue to lead in many areas, including automobiles, they have begun to face competition and potentially reduced profits in vital manufacturing areas. Meanwhile, Chinese overseas companies have made significant advances in the consumer electronics sector, using low prices and good quality, though overseas automobile investments have gained little traction. The article concludes that, if the Chinese can improve their product quality, capitalize on improving managerial skills and a deeper level of experience in the region, and establish brands they can sell with reliable distribution networks, Japanese companies could face losses to their Asian neighbor in these important parts of the continent they have dominated for decades.     

COVID-19 and American Attitudes toward U.S.-China Disputes

The COVID-19 outbreak has fueled tension between the U.S. and China. Existing literature in international relations rarely focuses on virus outbreaks as factors affecting international relations between superpower countries, nor does research examine an outbreak’s potential influence on the public’s opinion about their country’s foreign policy. To bridge this research gap, this study explores the extent to which the American public may be prone to favor policies that “punish” China via existing U.S.-China disputes, such as the South China Sea dispute and the U.S.-China trade war. I conducted an online survey using Amazon’s Mechanical Turk and ran multinomial and ordered logit models to estimate the association between an individual’s preferred policies and the country or government an individual blame for the impact of the pandemic. After controlling several essential confounding factors, such as one’s levels of nationalism and hawkishness, I found strong evidence that there is a positive association between people’s attribution of blame to the Chinese government and the likelihood of supporting aggressive policy options in the two disputes with China. That is to say, U.S. citizens who believe that the Chinese government is solely culpable for the outbreak in the U.S., compared to those who think otherwise, are more likely to support hawkish policy options, such as confrontational military actions, economic sanctions, or higher tariff rates. The research provides a glimpse into where Americans may stand in these disputes with China and the potential development of U.S.-China relations in the post-pandemic era.

     

Seeking ontological security through the rise of China: New Zealand as a small trading nation

Maintaining global peace as China rises is a key strategic goal of Western liberal democracies. Compared to other western liberal democracies, New Zealand's response to the ‘rise of China’ is notable for its absence of security and political frictions and for the achievement of a series of diplomatic ‘firsts’. Can this be explained only by material concern over the national economic interest as China's role in the global economy increases or do ideational factors also underlay how New Zealand engages China? This paper employs the ontological security framework to demonstrate how New Zealand identity as a ‘small trading nation’ and ‘good international citizen’ has shaped its turn to Asia and response to the ‘rise of China'. It first analyses the origins of New Zealand's outward facing identity and resultant foreign policy positions long before China became an important aspect of New Zealand trade policy. It then shows how New Zealand seeks ontological security as a ‘small trading nation’ and ‘good international citizen’ in its relations with China and how China has responded to this type of engagement. The paper illustrates the importance of ideational factors in Western liberal democracies’ responses to the ‘rise of China’.     

Korean foreign direct investment in Europe: The determining forces

Korea's more complete integration into the world economy has been stunted by past government policies aimed at preserving comprehensive control over the domestic economy. This situation has recently changed owing to prevailing structural weaknesses in the Korean economy and the dictates of the global competitive environment. Consequently, the level of Korean overseas investment has escalated, particularly in Europe — the Triad region which has traditionally attracted limited inward FDI from Korea's large chaebol companies. This paper examines the determining forces that lie behind this trend. It is recognized that early Korean investments in the EU were principally driven by reactionary motives when confronted by actual or anticipated policy threats. While it is argued that the pretext for such investment has not significantly diminished, the imperatives of globalization together with emerging economic conditions in both east and west Europe have provided considerable incentives for more proactive FDI strategies to be adopted. The recent announcements by senior chaebol of intended large‐scale investments in Europe suggest that this new pattern is becoming increasingly apparent.     

Asymmetrical rivalry between China and Japan in Africa: to what extent has Sino-Japan rivalry become a global phenomenon?

Abstract

To what extent is China–Japan rivalry a global phenomenon, and what is the nature of the rivalry they engage in outside their own region? Literature on Sino-Japanese rivalry abounds, but it pays scant attention to the relevance of the rivalry outside East Asia. This article argues that Sino-Japanese rivalry has indeed become a global phenomenon, that various forms of the rivalry are evident in Africa, and that they are mostly of an asymmetrical nature. Quantitatively, China’s contribution to Africa is far greater than that of Japan, with the exception of foreign direct investment (FDI). Qualitatively, though, Japan has a stronger sense of the rivalry than China has, revealing a psychological aspect to the asymmetry as well. Contextually, the types of activity that Chinese and Japanese actors carry out in Africa are not necessarily the same, which makes the rivalry all the more asymmetrical. The rivalry has become more apparent recently, not only because of the rise of China but also because of a change in the meaning of ‘Africa’ – from a region of ‘poverty’ and ‘hunger’ to a region of ‘economic opportunities’. That said, Africa – to a greater or lesser degree in each of its countries – still suffers from conflict and instability. As a result, the ability of Japan and China to exert power and influence throughout Africa is somewhat restricted.     

Examining Strategic Narratives in Chinese Official Discourse under Xi Jinping

Research suggests that over the last two decades China has undergone dramatic changes in its communication climate. The former mono-glossic environment has made way for a plurality of voices, now debating (non-sensitive) political, social and economic issues on online fora. While this has contributed to a more consultative state-society relationship, the leadership still wields the conductor’s baton over the ensemble of voices to ensure adherence to the main melody. The uneasy coexistence of transformation and conservatism is especially salient when it comes to propaganda and soft power, which the Chinese authorities fully deploy to disseminate their vision of the ‘China story’ abroad and to legitimize continued CCP rule at home. This paper examines the various strategic narratives that cumulatively constitute this ‘China story’, designed for the international as well as domestic audiences. It looks into divergences/convergences with the political discourse of previous generations of leadership by examining argumentation patterns and discursive strategies used in speeches and texts produced by top-level officials and their ‘core’ leader, Xi Jinping. While, on the surface, new slogans, such as ‘the Chinese dream’, the ‘New Normal’, the ‘Four Comprehensives’, the ‘Community of Common Destiny’ appear to be Xi Jinping’s hallmark, and cumulatively contribute to the all-encompassing official doctrine of ‘Xi Jinping Thought’, no paradigmatic ideological change emerges from the narratives. Yet, the strategies utilised to spread ‘the China story’ are more diverse, the conductor’s baton is held more tightly, the main melody is chanted more loudly and the echoes are carried further abroad over the mountains and seas via the new Silk Road initiatives to present an alternative world order of ‘Socialism with Chinese characteristics’.

     

Alternative South–South development collaboration? The role of China in the Coega Special Economic Zone in South Africa

Aid, in the form of financial aid and investment, has become increasingly prevalent in both bilateral and multilateral partnerships in the BRICS. In Africa, the Forum on China–Africa Cooperation provides the official framings for forms of development assistance to the continent, with financial forms of aid available through the New Development Bank and the China–Africa Development Bank (CADFund). This article explores how Chinese international development assistance has influenced South Africa's economic growth and development strategies and is reshaping South Africa as “gateway” to Africa and continental leader. Special economic zones (SEZs) have become a prioritised form of BRICS development collaboration particularly in terms of Chinese trade and investment expansionism into Africa through South Africa. Chinese international development assistance and foreign direct investment in South Africa in particular are very notable and have been strengthened during the Chinese official state visit prior to the Johannesburg BRICS Summit in 2018. The article critically analyses the development policy discourse on BRICS spearheading an alternative model of South–South international cooperation by examining the Coega SEZ in South Africa, hailed as the most SEZ in Africa. The article critically examines the development alternative potential of the Coega SEZ.     

Economic Insecurity and the Globalization of Production

A central question in the international and comparative political economy literatures on globalization is whether economic integration increases worker insecurity in advanced economies. Previous research has focused on the role of international trade and has failed to produce convincing evidence that such a link exists. In this article, we argue that globalization increases worker insecurity, but that foreign direct investment (FDI) by multinational enterprises (MNEs) is the key aspect of integration generating risk. FDI by MNEs increases firms' elasticity of demand for labor. More-elastic labor demands, in turn, raise the volatility of wages and employment, all of which tends to make workers feel less secure. We present new empirical evidence, based on the analysis of panel data from Great Britain collected from 1991 to 1999, that FDI activity in the industries in which individuals work is positively correlated with individual perceptions of economic insecurity. This correlation holds in analyses accounting for individual-specific effects and a wide variety of control variables.