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Erschienen in: Studies in Comparative International Development 1/2021

05.03.2021

Exploring the Parameters of China’s Economic Influence

verfasst von: Scott L. Kastner, Margaret M. Pearson

Erschienen in: Studies in Comparative International Development | Ausgabe 1/2021

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Abstract

To what extent do China’s linkages to the global economy translate into political influence in other countries? This topic is the focus of copious amounts of policy and scholarly attention in the USA and around the world. Yet without thoughtful conceptualization of key assumptions and creation of research designs that allow identification of mechanisms of potential influence, we cannot gain an accurate understanding of Chinese influence. How can we assess Beijing’s intentions? Through what mechanisms—both intended and unintended—might influence arise, and under what conditions is influence most likely to occur? To what degree are Chinese companies agents of the state and therefore tools of economic statecraft? What factors condition how host countries react to economic ties with China? In this article, we explore existing scholarship on these questions, and assess promising directions for future research.

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Fußnoten
1
U.S. Department of Defense 2018: 12. See also, e.g., U.S. – China Economic and Security Review Commission Annual Report to Congress 2018: 288.
 
3
Quoted in Khanna 2019.
 
7
See, e.g.: Gaventa 1982; and Lukes 1974.
 
8
On Chinese analysts’ conceptions of influence, see Glosny 2016.
 
9
See, e.g., Yarhi-Milo 2014.
 
10
On China’s varying objectives for BRI see Blanchard 2017; and Ye 2020. On the balance of strategic and economic motivations for China’s foreign economic policies more generally, see Saunders 2006.
 
11
Rolland 2019.
 
12
Xi 2017. See also, for example, State Council of China 2015.
 
13
These goals are summarized in Wuthnow 2017.
 
14
On soft power, see Brady 2015. On status, see Pu and Schweller 2014. On motives for foreign aid, see Fuchs and Rudyak (2019).
 
15
On geostrategic intent, see: Eisenman and Heginbotham 2018; and Friedberg 2018.
 
16
Russel and Berger 2020.
 
17
Kardon 2021.
 
18
State Oceanic Administration 2016 (p. 239).
 
19
Bräutigam 2020
 
20
For instance, Jiang Zemin in 1994 suggested that “increasing cross-Strait economic exchanges and cooperation…will be useful in boosting the development of cross-Strait relations and national unification.” See Zhao 1999, 27.
 
21
Xi 2017.
 
22
Ye 2020.
 
23
Bräutigam and Tang 2012; Fuchs and Rudyak 2019.
 
24
Kroeber 2016; Ye 2020.
 
25
NDRC 2015.
 
26
SCIO 2017.
 
27
Dreher et al 2018 use an innovative empirical strategy to argue that official aid is driven more by foreign policy considerations, while commercial factors motivate what they term “other official flows” (OOFs) that are often categorized as aid. See also Russel and Berger 2020.
 
28
Wuthnow 2017: 7.
 
29
E.g., NDRC 2015.
 
30
Kroeber 2016.
 
31
See: Jones and Zeng 2019; and Zhi and Pearson 2017.
 
32
On policy formulation and implementation challenges in China, see: Lieberthal and Oksenberg 1988; and Lieberthal and Lampton 1992. To concur with the introductory chapter in this special issue (Fravel et al. 2021), we find it crucial to understand the domestic political imperatives that shape China’s foreign policy-making.
 
33
On logrolling in foreign policy, see: Snyder 1991.
 
34
Ye 2020.
 
35
Wuthnow 2019.
 
36
Ferchen and Perera 2019; Shi 2015.
 
37
On causal mechanisms of economic influence, see: Drezner 1999/2000; Mastanduno 1992, 2003; Abdelal and Kirshner 1999/2000; and Kahler and Kastner 2006.
 
38
Hufbauer et al 1985; Baldwin, 1999/2000; Pape 1997.
 
39
Drezner 2003; Baldwin 1985.
 
40
Drezner 2003.
 
41
Reilly 2021.
 
44
See: Tanner 2007; Norris 2016; Kastner 2009.
 
45
Reilly 2021; and Zhang 2019.
 
46
Zhang 2019.
 
47
Reilly 2012, 2013, 2017, 2021. Comparative perspectives include Zhang 2019; and Harrell et al 2018. Fuchs and Klann (2013) argue that China punishes countries economically for hosting the Dalai Lama.
 
48
E.g.: Drezner 1999/2000; Kahler and Kastner 2006; Baldwin 1985.
 
49
Mastanduno 2003.
 
50
On the tourism case, see for instance Harrell et al 2018. On PRC use of tourism in economic statecraft more broadly, see Lim et al. 2020.
 
51
Reilly 2017, 2021; Norris 2016; Wong 2018.
 
52
Keng et al 2017; Wei 2013; Wong and Wu 2016.
 
53
Reilly 2017; DeVotta 2016; Reilly 2016; Lim and Mukherjee 2019; and Wong 2018.
 
54
Dreher et al 2018.
 
55
Kirshner 2008; Abdelal and Kirshner 1999/2000, referring to Hirschman 1945. See also Flores-Macias and Kreps 2013; and Kastner 2016.
 
56
On the pacifist orientation of internationalist groups, see Solingen 1998.
 
57
Weiss 2014.
 
58
For a recent study of Japanese business lobbying on China-related policy during the Koizumi administration, see Fu 2020, who finds that Japan’s major business associations engaged in only limited efforts to dissuade visits to the Yasukuni Shrine.
 
59
The Wall Street Journal, 2 December 2020. https://​www.​wsj.​com/​articles/​china-has-one-powerful-friend-left-in-the-u-s-wall-street-11606924454. U.S. business interests played an even stronger role in China’s 2001 WTO accession process. Pearson 2001.
 
60
Tanner (2007) uses this term.
 
61
Schubert et al 2016.
 
62
See: Schubert et al 2016; Schubert 2013; Keng and Schubert 2010. Taishang do, however, seek close relationships with individual politicians in Taiwan; see Schubert et al. 2016: 35.
 
63
Schubert et al. 2016: 32–34; Rigger 2011 ch. 6.
 
64
On limitations of the Taishang as a coherent voting bloc in Taiwan, see Schubert 2013: 58–60.
 
65
Nye 1990; Nye 2012. On a socialization process that affects elite (not mass) attitudes, see Ikenberry and Kupchan 1990.
 
66
Pew Research Center 2017.
 
67
Lim and Mukherjee 2019: 74.
 
68
See Cole 2018.
 
69
Some studies point to this type of effect in Taiwan, where businesses with China interests have invested in local media. See: Cole 2017; Schubert 2013: 62–63; and Financial Times, July 16, 2019: https://​www.​ft.​com/​content/​036b609a-a768-11e9-984c-fac8325aaa04.
 
70
Bailiard 2016.
 
71
On this dynamic, see Kokas 2017.
 
72
Note that threats were vague in this case (we discuss the implicit nature of some Chinese economic coercion below). New York Times, 25 July 2018: https://​www.​nytimes.​com/​2018/​07/​25/​business/​taiwan-american-airlines-china.​html
 
73
China has been known to politicize market access (such as visas to perform in China) for pop music artists from Korea or Taiwan. On the Korea case, see Zhang 2019.
 
74
Liao and McDowell (2015) find a relationship between increased usage of the renminbi and related forms of economic agreements with other countries.
 
75
On security implications of Huawei’s dominance see, e.g., New York Times 18 July 2019: https://​www.​nytimes.​com/​2019/​07/​18/​technology/​huawei-ban-vietnam.​html
 
76
On factors conditioning the efficacy of economic sanctions, see, e.g.: Blanchard and Ripsman 1999/2000; Brooks 2002; Drezner 2009.
 
77
Norris 2016.
 
78
Wong 2018.
 
79
Baldwin 1985: 36.
 
80
Norris (2016), for example, analyzes the agency relationship between the Chinese state and the Chinese development bank.
 
81
Along with Anbang Insurance, private conglomerates HNA Group and Dalian Wanda were punished in early 2018 for aggressive overseas activities. Financial Times, 23 February, 2018 at https://​www.​ft.​com/​content/​8ed61466-186e-11e8-9376-4a6390addb44. On the drop in lending, see Financial Times 7 December 2020 at https://​www.​ft.​com/​content/​1cb3e33b-e2c2-4743-ae41-d3fffffa4259..
 
82
It will cost an estimated US$800 million to US$1 billion to replace Huawei and ZTE equipment in the Rural U.S. Reuters 24 September 2019, online at https://​www.​reuters.​com/​article/​us-usa-huawei-congress/​u-s-lawmakers-propose-1-billion-fund-to-replace-huawei-equipment-idUSKBN1W931C. The example of US reactions to Japan’s economic powerhouses – keiretsu – is instructive, as assumptions about their enduring power were based on questionable assumptions (Lin and Milhaupt 2013).
 
83
Norris 2016. See also Zhang and Zhu 2018.
 
84
Rithmire 2019.
 
85
Davis et al (2019) find agency behavior can vary among SOEs, e.g., import-based SOEs are more likely to demonstrate agency behavior than export-oriented SOEs.
 
86
Li and Zeng 2019. See also Amighini et al 2013; and Cuervo-Cazurra et al 2014.
 
87
Chen et al. 2018.
 
88
On SOE reforms, see: Kroeber 2016; Lin and Milhaupt 2013.
 
89
These commanding heights sectors include, e.g.: financial services, resource, telecommunications, electric power distribution, aviation, and infrastructure engineering and construction. Pearson 2015.
 
90
Rithmire 2019.
 
91
National Intelligence Law 2018.
 
92
The question of the compulsion power of Chinese laws came to prominence with the detention in Canada of a Huawei executive, at the request of the US. For this case, Chinese lawyers produced opinions that such compulsions do not exist. See Financial Times March 4, 2019 at https://​www.​ft.​com/​content/​282f8ca0-3be6-11e9-b72b-2c7f526ca5d0.
 
93
Lin and Milhaupt 2013.
 
94
On the CCP’s appointment of top management through its Organization Department, see: Leutert 2018. Another lever of control is through party disciplinary channels, aimed at corporate corruption.
 
95
Lin and Milhaupt 2013: 726, 734. On multiple principals in China’s “fragmented authoritarianism,” see Lieberthal and Lampton 1992, and in China’s overseas activities Shi 2015.
 
96
NDRC 2017: 8.
 
97
Economists tend to view Chinese firms’ outward activities as primarily commercially motivated. See, e.g.: Kroeber 2016; Lardy 2014.
 
98
On SOEs’ focus on return on investment, see Kroeber 2016. Even state policy banks are under some pressure to engage in commercially-sound business practices.
 
99
According to a State Council (2016) report, in 2015 private enterprises led in foreign investment outflows and the number of mergers and acquisitions. See State Council of China 2016, “ODI Led for First Time by Private Firms” (23 September 23, 2016), at http://​english.​gov.​cn/​state_​council/​ministries/​2016/​09/​23/​content_​281475449151124.​htm.
 
100
Yan and Huang 2017; Hou 2019.
 
101
On the related issue of how close ties between data firms and the Chinese government raise suspicion overseas, see Liu (2021) in this issue.
 
102
On the hesitancy of firms to undertake risky projects, see Joy-Perez and Scissors 2018. Project risk was brought home by the terrorist attack on Chinese installations in late 2018.
 
103
Jensen et al 2012. Zhu and Shi (2019) demonstrate that Chinese firms prefer low-corruption environments. Paradoxically, Chen et al. (2018) argue that Chinese investment in Africa is relatively indifferent between good and poor governance environments, but tends toward investment in poor governance environments.
 
104
Hirschman 1970.
 
105
More generally, “financialization” of China’s economy, including SOEs, suggests pursuit of financial wealth by asset management firms may be a source of de-alignment. Wang 2015.
 
106
Wall Street Journal, 18 April 2018.
 
107
On ZTE’s dependence on US suppliers, see Wall Street Journal 7 July 2018, https://​www.​wsj.​com/​articles/​zte-pays-1-billion-fine-after-allegedly-violating-u-s-sanctions-1528374558. The Trump administration reduced some political sanctions but the court-imposed restrictions remained. China’s “Made in China 2025” initiative and the push for “dual circulation” in the 14th Five Year Plan (2021–2025) are efforts to counter this vulnerability.
 
108
Chen 2020.
 
109
See, e.g., Brady 2015; Meunier 2014; and Setser 2008. See also fn. 1.
 
110
Brazys and Kotsadam 2020; Isaksson and Kotsadam 2018; Knutsen et al 2017.
 
111
On mixed views of China in Peruvian regions with PRC investment, see Ratigan 2021.  For similar results in Africa, see also Morgan 2019.
 
112
In contrast, an incumbent boost is associated with World Bank loans. Knutsen and Kotsadam 2020.
 
113
Sautman and Yan 2009.
 
114
See Wong 2018 and country studies in Goh 2016. This raises the intriguing question of whether Chinese overseas activities are themselves endogenous to expectations of backlash. See, e.g., Han et al 2018.
 
115
Dreher et al 2019.
 
116
Pekkanen and Pearson 2018.
 
117
Autor et al 2016.
 
118
On domestic concerns about “blind and irrational investment,” see New York Times 12 March 2017, available at https://​www.​nytimes.​com/​2017/​03/​12/​business/​dealbook/​china-deals-capital-controls-hollywood.​html. Some of these rules aimed to prevent the movement of funds offshore. This was the main point of a late 2017 36-point code of conduct. Forbes online (Dec. 22, 2017), available at https://​www.​forbes.​com/​sites/​sarahsu/​2017/​12/​22/​china-tightens-overseas-investment-to-reduce-risks/​#7d853295772c.
 
119
Chinese NGO efforts to strengthen corporate social responsibility of its firms’ overseas operations have been supported by UN agencies (such as UNDP) and international NGOs, such as Global Witness.
 
120
On learning, see Hillman 2020 and, for example, Xi 2019. On reductions in overseas loans, see Financial Times 7 December 2020 at https://​www.​ft.​com/​content/​1cb3e33b-e2c2-4743-ae41-d3fffffa4259.
 
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Metadaten
Titel
Exploring the Parameters of China’s Economic Influence
verfasst von
Scott L. Kastner
Margaret M. Pearson
Publikationsdatum
05.03.2021
Verlag
Springer US
Erschienen in
Studies in Comparative International Development / Ausgabe 1/2021
Print ISSN: 0039-3606
Elektronische ISSN: 1936-6167
DOI
https://doi.org/10.1007/s12116-021-09318-9

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