Chinese Outwards Mercantilism – the Art and Practice of Bundling

43 Pages Posted: 13 Apr 2015 Last revised: 19 Apr 2015

See all articles by Joshua Aizenman

Joshua Aizenman

University of Southern California - Department of Economics; National Bureau of Economic Research (NBER)

Yothin Jinjarak

Victoria University of Wellington - School of Economics & Finance

Huanhuan Zheng

National University of Singapore

Date Written: April 2015

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

Aizenman, Joshua and Jinjarak, Yothin and Zheng, Huanhuan, Chinese Outwards Mercantilism – the Art and Practice of Bundling (April 2015). NBER Working Paper No. w21089. Available at SSRN: https://ssrn.com/abstract=2593668

Joshua Aizenman (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yothin Jinjarak

Victoria University of Wellington - School of Economics & Finance ( email )

P.O. Box 600
Wellington 6001
New Zealand

Huanhuan Zheng

National University of Singapore ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

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