Advertisement

State-Fueled Energy: Quantitative Comparison of State-Led Overseas Energy Financing in China and Japan

  • Junda JinEmail author
Original Paper
  • 28 Downloads

Abstract

China and Japan own the largest policy banks—state-owned financiers—in the world. Policy banks have recently drawn international attention as the Export–Import Bank of China (CHEXIM) and China Development Bank (CDB) play an important role in China’s overseas economic activities. This paper examines the extent to which the CHEXIM and CDB behave similarly to the Japan Bank for International Cooperation (JBIC), their Japanese counterpart in energy loan approvals. Combining third-party data from a new database of Chinese overseas energy finance and various matching databases, this paper proposes a fixed-effect model to compare the determinants of the CHEXIM, CDB and JBIC’s overseas energy loans from a comparative perspective. Like their Japanese counterparts, Chinese banks exhibit a certain degree of concern for the recipient’s domestic economy but also exhibit risk-seeking tendencies. Contrary to claims that China’s policy bank is a tool to gain geopolitical advantage, geopolitical concerns and energy security do not appear to be determinants of the CHEXIM’s overseas finance decisions.

Keywords

China State-led finance Energy Japan Overseas finance Loan 

Notes

Compliance with Ethical Standards

Conflict of interest

All the authors declare that they have no conflict of interest.

References

  1. Akamatsu, K. 1962. A Historical Pattern of Economic Growth in Developing Countries. The Developing Economies 1 (1746–1049): 3–25.Google Scholar
  2. Ben-Artzi, R. 2016. Regional Development Banks in Comparison: Banking Strategies versus Development Goals. Cambridge: Cambridge University Press.Google Scholar
  3. Bird, G., and Rowlands, D. 2005. “IMF Quotas; Constructing An International Organization Using Inferior Building Blocks,” School of Economics Discussion Papers 1305, School of Economics, University of Surrey.Google Scholar
  4. Brautigam, D. 2011. Aid ‘With Chinese Characteristics’: Chinese Foreign Aid and Development Finance Meet the OECD-DAC Aid Regime. Journal of International Development 23 (5): 752–764.Google Scholar
  5. Brautigam, D. 2009a. The Dragon’s Gift: the Real Story of China in Africa. Oxford: Oxford University Press.Google Scholar
  6. Brautigam, D. 2009b. The Dragon’s Gift: The Real Story of China in Africa. Oxford: Oxford University Press.Google Scholar
  7. Brautigam, D. 2015. Will Africa Feed China?. Oxford: Oxford University Press.Google Scholar
  8. Bräutigam, D., and X. Tang. 2012. Economic Statecraft in China’s New Overseas Special Economic Zones: Soft Power, Business or Resource Security? International Affairs 88: 799–816.Google Scholar
  9. Buckley, P.J., and M. Casson. 1976. The Future of the Multinational Enterprise. London: Palgrave Macmillan.Google Scholar
  10. Buckley, P.J., J. Clegg, A.R. Cross, X. Liu, H. Voss, and P. Zheng. 2007. The Determinants of Chinese Outward Foreign Direct Investment. Journal of International Business Studies 4 (38): 499–518.Google Scholar
  11. Chin, G.T., and K.P. Gallagher. 2019. Coordinated Credit Spaces: The Globalization of Chinese Development Finance. Development and Change 50 (1): 245–274.Google Scholar
  12. China Exim Bank. 2014. Introduction to China Exim Bank. Retrieved February 1, 2019, from China Exim Bank: http://www.investbg.government.bg/forums2014/wp-content/uploads/2014/11/2.EXIM-Bank.pptx.
  13. Crushman, D. 1985. Real Exchange Rate Risk, Expectations, and the Level of Direct Investment. The Review of Economics and Statistics 2: 297–308.Google Scholar
  14. De Beule, F., and J.-L. Duanmu. 2012. Locational determinants of internationalization: A firm-level analysis of Chinese and Indian acquisitions. European Management Journal 30: 264–277.Google Scholar
  15. Downs, E. 2011. Inside China Inc: China Development Bank’s Cross-Border. In John L. Thornton China Center Monograph Series, ed. B. Institution, 38–100. Washington, DC: Brookings.Google Scholar
  16. Dreher, A. 2006. Does Globalization Affect Growth? Evidence from a New Index of Globalization. Applied Economics 38 (10): 1091–1110.Google Scholar
  17. Dreher, A. 2009. Development aid and international politics: Does membership on the UN Security Council influence World Bank decisions? Journal of Development Economics 88 (1): 1–18.Google Scholar
  18. Dunning, J.H. 1976. American Investment in British Manufacturing Industry. New York: Arno Press.Google Scholar
  19. Dunning, J.H. 1979. Toward an Eclectic Theory of International Production: Some Empirical Tests. Journal of International Business Studies 11 (1): 9–31.Google Scholar
  20. Dunning, J.H. 1988. The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies 19 (1): 1–31.Google Scholar
  21. Dunning, J.H., and S.M. Lundan. 2008. Multinational Enterprises and the Global Economy, 2nd ed. Northampton, MA: Edward Elgar Publishing.Google Scholar
  22. Environmental Justice Atlas. 2017. San Roque Multipurpose Project, Philippines. Retrieved February 21, 2019, from Environmental Justice Atlas: https://ejatlas.org/conflict/san-roque-multipurpose-project.
  23. Fleck, R.K., and C. Kilby. 2001. Foreign Aid and Domestic Politics: Voting in Congress and the Allocation of USAID Contracts across Congressional Districts. Southern Economic Journal 67 (3): 598–617.Google Scholar
  24. Fleck, R.K., and C. Kilby. 2006a. How Do Political Changes Influence U.S. Bilateral Aid Allocations? Evidence from Panel Data. The Review of Development Economics 10 (2): 210–223.Google Scholar
  25. Fleck, R.K., and C. Kilby. 2006b. World Bank Independence: A Model and Statistical Analysis of US Influence. Review of Economic Development 10 (2): 224–240.Google Scholar
  26. Foster, V., W. Butterfield, C. Chen, and N. Pushak. 2009. Building Bridges: China’s Growing Role as Infrastructure Financier for Sub-Saharan Africa. Retrieved September 30, 2017, from The International Bank for Reconstruction and Development/The World Bank: http://hdl.handle.net/10986/2614.
  27. Gallagher, K., A. Irwin, and K. Koleski. 2012. The New Banks in Town: Chinese Finance in Latin America. Washington DC: Inter-American Dialogue.Google Scholar
  28. Ge, J. 2014. The Economic Diplomacy of Japan toward Southeast Asia: History and Reality. European Study 1: 10–121.Google Scholar
  29. Global Development Policy Center. 2017. China’s Global Energy Finance. Retrieved May 22, 2019, from Global Development Policy Center, Boston University: http://www.bu.edu/cgef/.
  30. Gonzalez-Vicente, R. 2013. Development Dynamics of Chinese Resource-Based Investment in Peru and Ecuador. Latin American Politics and Society 55: 46–72.Google Scholar
  31. Hanson, G.H., R.J. Mataloni, and M.J. Slaughter. 2001. Expansion Strategies of U.S. Multinational Firms. In The Brookings Trade Forum 2001, ed. D. Rodrik and S. Collins, 245–294. Washington, DC: US Bureau of Economic Analysis.Google Scholar
  32. Harrigan, J., C. Wang, and H. El-Said. 2006. The Economic and Political Determinants of IMF and World Bank Lending in the Middle East and North Africa. World Development 34 (2): 247–270.Google Scholar
  33. Hatch, W., and K. Yamamura. 1996. Asia in Japan’s Embrace: Building a Regional Production Alliance. Cambridge: Cambridge University Press.Google Scholar
  34. Horiuchi, A., and Q.Y. Sui. 1993. Influence of the Japan Development Bank Loans on Corporate Investment Behavior. Journal of the Japanese and International Economies 7 (4): 441–465.Google Scholar
  35. Johnson, C. 1982. MITI and the Japanese Miracle. Stanford: Stanford University Press.Google Scholar
  36. Kamiński, T. 2017. Sovereign Wealth Fund Investments in Europe as an Instrument of Chinese Energy Policy. Energy Policy 101: 733–739.Google Scholar
  37. Kaplinsky, R., and D. Messner. 2008. Introduction: The Impact of Asian Drivers on the Developing World. World Development 36 (2): 197–209.Google Scholar
  38. Kasahara, S. 2004. The Flying Geese Paradigm: A Critical Study Of Its Application To East Asian Regional Development. Geneva, Switzerland: UNCTAD.Google Scholar
  39. Khartoum, A. H. 2013. Merowe Dam project: The biggest Economic Accomplishment in Sudan. Retrieved from Sudan News Agency.Google Scholar
  40. Kilby, C. 2008. The Political Economy of Conditionality: An Empirical Analysis of World Bank Enforcement. Economic Working Paper, Vassar College.Google Scholar
  41. Klare, M. 2008. Rising Powers and Shrinking Planet: How Scarce Energy is Creating a World Order. Oxford: One World.Google Scholar
  42. Kojima, K. 2000. The “Flying Geese” Model of Asian Economic Development: Origin, Theoretical Extensions, and Regional Policy Implications. Journal of Asian Economics 11: 375–401.Google Scholar
  43. Lubell, H. 1961. Energy: Economics, Politics, and Security. World Politics 13 (3): 400–422.Google Scholar
  44. McGillivray, M. 1989. The Allocation of Aid Among Developing Countries: A Multi-donor Analysis Using a Per Capita aid Index. Author Links Open the Author Workspace 17 (4): 561–568.Google Scholar
  45. Norris, W.J. 2016. Chinese Economic Statecraft: Commercial Actors, Grand Strategy and State Control. Ithaca: Cornell University Press.Google Scholar
  46. Ozawa, T. 2010. The (Japan-Born) “Flying-Geese” Theory of Economic Development Revisited—And Reformulated from a Structuralist Perspective. New York: Center on Japanese Economy and Business, Columbia Business School.Google Scholar
  47. People’s Daily. 2014. 探访停工后的缅甸密松水电站:中缅两败俱伤 (Investigation of Suspended Myitsone Dam: A Lose-Lose for China and Myanmar). Retrieved January 31, 2019, from People’s Daily: https://www.guancha.cn/Neighbors/2014_01_06_197706.shtml.
  48. Piccone, T. 2016. China and Latin America: The Geopolitical Implications of Growing Economic and Trade Ties. Washington DC: Brookings Institute.Google Scholar
  49. Reuber, G.L., H. Crookell, M. Emerson, and G. Callais-Hamonno. 1973. Private Foreign Investment in Development. Oxford: Clarendon Press.Google Scholar
  50. Schneider, B.R. 2013. Hierarchical Capitalism in Latin America. Cambridge: Cambridge University Press.Google Scholar
  51. Thacker, S.C. 1999. The High Politics of IMF Lending. World Politics 52 (1): 38–75.Google Scholar
  52. van Hoesel, R. 1999. New Multinational Enterprises from Korea and Taiwan: Beyond Export-led Growth. New York: Routledge.Google Scholar
  53. Vernon, R. 1966. International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics 80 (2): 90–207.Google Scholar
  54. William and Mary College. 2017. AidData. Retrieved Novemebr 30, 2018, from AidData.org: https://www.aiddata.org/.
  55. World Bank. 2018a. Political stabilityCountry rankings. Retrieved September 30, 2018, from Global Economy—Economic Indicators of Over 200 Countries: https://www.theglobaleconomy.com/rankings/wb_political_stability/.
  56. World Bank. 2018b. World Development Indicators. Retrieved May 31, 2019, from DataBank, World Bank: http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators.
  57. Yergin, D. 1991. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster.Google Scholar
  58. Yergin, D. 2006. Ensuring Energy Security. Foreign Affairs 85 (2): 69.Google Scholar
  59. Yoshino, M.Y. 1976. The Japanese Multinational Enterprise: Strategy and Structure. Cambridge: Harvard University Press.Google Scholar

Copyright information

© Fudan University 2019

Authors and Affiliations

  1. 1.Global Development Policy CenterBoston UniversityBostonUSA
  2. 2.BeijingChina

Personalised recommendations