Abstract
Energy cooperation is an important part of the Belt and Road Initiative (BRI). As China’s investment in One Belt One Road countries has increased substantially, a natural question is whether the investment in the BRI countries can contribute to its oil import since it is the most critical part of the national energy security strategy. By employing a dataset that includes the oil import from BRI countries and the oil-related investment in these countries, along with other control variables, an econometric analysis is conducted to investigate the relationship between these two variables. The estimation results provide supporting evidence for the hypothesis that China’s oil investment in BRI countries has helped enhance its oil security. Specifically, investment in BRI countries increases the oil import volume from the host country and diversifies China’s sources of imports. Further analysis also reveals that the effects do not differ by investment mode, e.g., greenfield or mergers and acquisitions (M&A).
Highlights
During his visits to Central and Southeast Asian countries in 2013, President Xi Jinping proposed to jointly build the “Silk Road Economic Belt” and “21st-Century Maritime Silk Road”, which later became known as the Belt and Road Initiative
We explored whether the investment type matters when estimating the effect of OFDI on oil imports, and ran separate estimations for greenfield investment and mergers and acquisitions (M&A)
The estimation shows that China’s energy investment in a Belt and Road Initiative (BRI) country is positively associated with the probability of importing oil from that country
Summary
During his visits to Central and Southeast Asian countries in 2013, President Xi Jinping proposed to jointly build the “Silk Road Economic Belt” and “21st-Century Maritime Silk Road”, which later became known as the Belt and Road Initiative (hereinafter referred to as “BRI”). Among the countries along the Belt and Road, Russia, Central Asian and the Middle East have always been China’s important sources of energy imports, and important destinations for Chinese enterprises’ overseas investment in recent years. Even with slower economic growth within the “New Normal” economic environment, China’s oil consumption and its important dependencies are expected to continue to grow over the two decades [10]. In this context, energy security, especially oil security, is considered as the top concern of China’s policymakers
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