China's Economic Diplomacy and the Politics-Trade Nexus

University of Heidelberg Department of Economics Discussion Paper Series No. 609

26 Pages Posted: 26 Mar 2016

See all articles by Andreas Fuchs

Andreas Fuchs

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; Kiel Institute for the World Economy

Date Written: March 1, 2016

Abstract

This article reviews the literature on the linkages between political tensions, economic diplomacy and international trade in the light of China’s rise in the global economy. The existing scholarly work suggests that economic diplomacy should be more pivotal in economic exchange with China than with Western market economies. In an econometric test, I analyze how diplomatic tensions, measured through foreign dignitaries’ meetings with the Dalai Lama, affect the likelihood of an official visit from a Chinese leader. The results show that the likelihood of the Chinese leadership traveling to a country is 13.6 percent lower if the country’s government receives the Dalai Lama in a given year but increases in the following year, supposedly to restore ties. This finding underlines that economic diplomacy is an important channel linking political climate and economic exchange between nations.

Keywords: economic diplomacy, international trade, embassies, political climate, state visits, leadership travel, emerging economies, China, Dalai Lama, Tibet

JEL Classification: F51, F53, H77, O19, P33

Suggested Citation

Fuchs, Andreas, China's Economic Diplomacy and the Politics-Trade Nexus (March 1, 2016). University of Heidelberg Department of Economics Discussion Paper Series No. 609. Available at SSRN: https://ssrn.com/abstract=2743520 or http://dx.doi.org/10.2139/ssrn.2743520

Andreas Fuchs (Contact Author)

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
117
Abstract Views
521
rank
237,613
PlumX Metrics