Abstract
This paper explores the often-overlooked impact of geopolitical risk and natural resource utilization on China's economic performance, challenging existing literature predominantly focused on the ‘resource curse’ and its implications for economic growth. Our investigation leverages time-series data from 1985 to 2021, incorporating key variables such as gross capital formation and international trade. Applying advanced Cointegration and OLS procedures, we scrutinize long-term causal relationships, overcoming common limitations associated with time-series data-related tests. Our results demonstrate a surprising inverse relationship between China's economic performance and both geopolitical risk and natural resource utilization, providing empirical evidence of a ‘resource curse’ in China. However, gross capital formation and trade exhibit a positive impact, suggesting potential avenues for economic bolstering. These robust findings offer novel insights for both scholars and policymakers, pointing towards strategies to mitigate geopolitical risks and optimize natural resource usage, thereby transforming the perceived ‘curse’ into a ‘blessing’ for China's economic future.
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