Abstract
ABSTRACT Chinese investment in Central and Eastern Europe (CEE) has been expanding in recent years. As the economic ties deepen, security concerns also rise with arguments decrying Chinese investment and loans as a Trojan horse aiming at buying off political influence and dividing the European Union (EU) from within. On the other hand, some recent studies suggest that the volume and threat of Chinese capital have been exaggerated by politicians from different fronts. My study contributes to the understanding of Chinese economic statecraft in CEE by examining whether it follows a ‘divide and rule’ strategy. I argue if such a strategy holds Chinese capital should increase disproportionately in CEE countries that have recently joined the EU. I apply a difference in differences (DID) design to test whether Chinese investment and trade in CEE are driven mostly by such a divisive geopolitical motivation, finding no empirical support.
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