Abstract
Using a novel dataset on Chinese large-scale overseas investment and project contracts by sector and mode of entry, we analyze whether Chinese outward activity (COA) before the Great Recession worsened or alleviated the contractionary phases in developing countries. We find that, on average, COA did not increase recessionary vulnerability. Both sectoral targeting and the size of pre-crisis engagement matter. While COA in financial market sectors implies an aggravation, substantial pre-crisis investment in energy, metals and transportation industries tends to attenuate the slump. Additionally, the mode of entry, i.e. through either greenfield investment or mergers and acquisitions, also matters.
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