Group 2: Hul Moniroth, Nin Dane, Moeung Cheery, Choem Putheary, and Prom Thealyza
Instructor Name: Dr. Ngoy Yuthnea
Course: IS302: International Political Economy
Date: December 26, 2023
Article Review
An Analysis of the International Political Effect of the Chinese Overseas Investment Boom
The article "Money talks?: An Analysis of the International Political Effect of the Chinese
Overseas Investment Boom" was a research article published on August 14, 2020, by Routledge in
VOL. 29, NO. 1, 202–226. This was written by four authors, namely Gongyan Yang, Tingfeng Tang,
Beibei Wang, and Zhen Qi, all of whom came from different universities around China.Yang,
This article explores how China's overseas investments (ODI) between 2005 and 2015 affected
its relationships with 192 partner countries. It criticizes past research for overlooking the diverse types
of investments, such as who owns the companies making them and what sectors they target. The study
uses a statistical model to analyze China's ODI data and test whether it fosters closer ties with other
countries. It specifically looks at investments by state-owned companies (SOEs) versus private ones
and also examines different sectors like natural resources and infrastructure. The results show that ODI
generally improves political relations, but the impact varies depending on the investment type and
sector. SOE investments in natural resources and infrastructure seem to be particularly effective in
strengthening ties.
One of the main discussions in the article is the “go global” policy, a Chinese government
initiative promoting foreign investment that simplifies approval procedures and allows investors to
assess feasibility. The policy has resulted in 85% of applications being handled by provincial
departments, and most overseas investments can obtain approval within three working days. However,
the study found that measures for overseas investment do not correlate with bilateral political relations.
The study also tested different coding methods for measuring political relations between countries
using bilateral event data from Global Data on Events, Location, and Tone (GDELT). The results were
similar to baseline results, with the sum of the severity-weighted number of negative events creating a
single annual observation. Another main discussion is that the study confirms China's overseas
investment value using data from FDI Markets and Thomson Reuters' databases. The study also
disaggregates trade dependence into trade and GDP to assess political relations. The China Global
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Investment Tracker, covering Chinese investments over $100 million, was estimated using two-year
averages to reduce large data variations.
The strengths of this article are that the authors provide a comprehensive analysis of the
international political effects of Chinese overseas investment, focusing on the complex relationship
between economic interdependence and global political relations. It differentiates between state-owned
enterprises (SOEs) and privately owned enterprises (POEs) and the sectors to which China's investment
flows, contributing to the literature on how interdependence affects international conflict. The
paradoxical impact of increased Chinese investment, which leads developed countries to move away
from China for foreign policy interests, challenges conventional wisdom about the influence of
economic ties on political relations. However, the study has weaknesses, such as focusing on the impact
of Chinese investment and potentially neglecting the broader context of the international political
economy and the influence of investments from other countries on global political relations. The
authors' emphasis on the nuanced impact of Chinese investments on global political relations aligns
with the evolving understanding of the complex interplay between economic interdependence and
international conflict. Further research and analysis are needed to provide a more comprehensive
understanding of the complex dynamics at play in the international political economy.
In conclusion, China's overseas foreign direct investment has grown rapidly over the last
decade, but little systematic study has been conducted on the potential foreign policy consequences of
this growth. The study analyzed the impact of investment on UNGA voting patterns and found that
increased Chinese investment has led to more divergence from developed countries in terms of their
foreign policy positions at the UN. The negative effect of this boom on bilateral relationships is driven
by both state-owned enterprise investors and investment in the natural resources sector. The study
suggests that researchers should consider not only the amount of foreign direct investment but also the
ownership types of investing firms (SOEs) and target sectors in host countries. The study also suggests
that China's SOEs can play a significant role in shaping the future of political relations, but government
intervention can provoke negative reactions from politicians or the public in host countries.
Reference
Yang, G., Tang, T., Wang, B., & Qi, Z. (2020). Money talks?: an analysis of the international
political effect of the Chinese oversea investment boom. Review of International Political
Economy, 29(1), 202- 226.
https://doi.org/10.1080/09692290.2020.1806094
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