Chinese Investment Research Articles

Empirical Evidence of Cognitive Biases among Chinese Investors

The convoluted world of finance is filled with a number of irrationalities that the science of behavioral finance seeks to explain by bringing cognitive biases. Cognitive bias is a systematic pattern of deviation from rationality and is caused by limited cognitive capacities. By specifically analyzing Chinese investors, the paper aims to identify common cognitive biases exercised by high net-worth Chinese investors that lead to insufficient diversification and naive diversification in portfolio construction and to explain the following scenarios that are not commensurate with classic financial theories: the reason why investors prefer rule of thumbs instead of complete diversification; or when they do diversify, they simply takes N instruments and consider it done; the fact that people stick with a chosen stock or fund even when their prospects are not favored and other opportunity has arisen; and that investors from the same social background as a whole might have experienced certain preferences. And finally, when the cognitive biases are exercised by large enough of a population, stock market might suffer abnormal variances from it. The answers to these questions are studied by qualitative research methodology in this paper, narrative inquiry and inductive approach, to generalize and conclude to observed examples.

Dilemma and Countermeasures to National Security Review in M&A by Chinese Companies in the US

The national security review is an inescapable area for foreign investors to invest in the US. In recent years, the number of CFIUS reviews of cross-border mergers and acquisitions has been on the rise, as well as the number of vetoes, reflecting concerns that the US may lose its global leadership. At a time when competition between the US, and China is intensifying, CFIUS has shown a natural hostility towards Chinese investors, and the situation for Chinese companies in the US is not promising, with a higher rate of failed M&A than in other countries. This has seriously impacted Chinese direct investment in the US. This paper suggests that the reasons for this problem are twofold. On the one hand, there is the deviant treatment of Chinese companies by CFIUS. On the other hand, Chinese companies have their reasons for failing to enter the US including the fact that most of their acquisitions occur in sensitive areas involving national security and ignoring the CFIUS review process. Based on this, this paper argues that Chinese companies should not only formulate a clear M&A strategy before the M&A process but also take the initiative to negotiate with CFIUS and seek judicial remedies when necessary.

A Comparative Policy Analysis for Cross-border M&A between China and Africa that Advances China's Leading Position in Mining

China is still looking for resources and has recently engaged in aggressive cross-border M&A in the mining industry. Per China's 14th Five-Year Plan, the resource plan builds the foundation of China's rapid industrial development and growing economy. In recent years, it has been observed that acquisitions are focusing more on emerging markets' resources, such as Africa. Despite the negative effect of the pandemic, which cooled down cross-border mergers and acquisitions (CBMAs) in the mining industry, mining M&A's strategic importance to global industrial development makes it a major area of study. This phenomenon of mining M&A becoming China's story is closely related to economic policies and regulations in China and Africa. Hence, this article develops a comparative analysis of the different procedures in China and critical geographies in Africa that affects China's unceasingly expanding mining industry through acquisitions in Africa. Through comparative research analysis, we find that Chinas One Belt One Road Initiative (BRI) promotes CBMAs and investments in Africa and reduces operational barriers in policies and technology. The CBMAs success relies on a thorough understanding of local rules, major players, and legal policies in both nations. African countries have worked to improve their mining codes and raised their devotion to ESG to attract foreign investments. The inference is that Africa still possesses a great untapped potential for Chinese investors in the mining sector who understands the local market realities and can alleviate risks.

Comparison of Investment Banking Models in the US and China

Investment banks in the United States first emerged in the early 19th century, with a focus on securities underwriting. Compared with other countries, the United States investment banks were established earlier, and after the subprime crisis, the United States investment banks, through their own exposure to business problems, improved so that they have a more perfect regulatory system and a more advanced business model. As a result, in the process of developing its own business, China's investment banks should take the essence and discard the dross in order to find a suitable development direction for themselves, gaining recognition in the capital market construction and promoting the further improvement of China's international status. This paper uses literature analysis and comparative analysis to explore the differences between the operating models of investment banks in China and the US, and to provide insights and suggestions for the development of Chinese investment banks. The study finds that investment banks in China should expand the attribution model, thereby increasing the concentration of capital. At the same time, the proportion of securities brokerage business should be adjusted and the leverage ratio in the industry should be strictly controlled to avoid excessive internal consumption.

The Belt and Road Initiative in Nepal: Potential impacts and implications

The Belt and Road Initiative is emerging as a global phenomenon with a potential of bearing on almost all nations on Earth in different ways. In this context, this article, generally, is an attempt to demonstrate that impacts and implications of the BRI in Nepal will be governed by important national (Chinese) and international factors. Specifically, it argues that factors that have high developmental potential for Nepal include China's persistent rise and concomitant creation of the multipolar world, China's upholding of its international polices and the BRI principles, reproduction of the BRI experiences of other countries in Nepal, China's continuous pursuit of its socialism-aspiring path of development, its potential embarkment on a predominantly socialist path in the future. It argues that China’s future embarkment on a predominantly capitalist path can have ambivalent impacts ranging from highly appropriative to highly supportive. Likewise, the US–China conflict can also have ambivalent impacts ranging from boosting of Nepal’s negotiating power between the two powers to compromising of Nepal’s sovereignty and stability. The US–China conflict can also push China to treat Nepal as strategically highly important and, therefore, as a favored nation, pouring massive investments. It shows that the Chinese investment will enhance Nepal’s status vis-a-vis the US, the EU and India by cutting down its age-long dependencies on them; and will be conducive to the geographically-distributed development and capital accumulation.

Chinese Foreign Real Estate Investment and Local Voting in US Presidential Elections

Abstract Despite the increasing globalization of housing markets, little is known about its political implications. This study investigates whether rising Chinese investments in US homes influenced local voting in recent US presidential elections. Building on pocketbook/sociotropic voting and nativism theories, I develop hypotheses on the electoral consequences of foreign real estate investment through greater home demand and equity, improved local economies, and changing neighborhoods. Using difference-in-differences designs that combine a unique shock to Chinese capital outflows in 2013 with county-level measures of local attractiveness to Chinese investments, I find that greater exposure reduced Democratic vote shares in both the 2016 and 2020 presidential elections. Furthermore, an initially larger white population strengthened this effect, while a larger college-educated population weakened it. In contrast, local equity gains, housing competition, or economic strength did not systematically influence the effect. Together, the results appear more consistent with the pro-conservative effects of nativism.

Development and Militarization in Balochistan, Pakistan

This article examines the interplay of development, militarization and culture of impunity in Balochistan. It contends that the State’s pursuit of large-scale infrastructure projects is intensifying the conflict. Balochistan has increasingly been positioned as the potential fulcrum of Pakistan’s economic revival due to its vast, untapped resources and significant Chinese investments. While this vision seems promising, it has heightened Baloch anxieties and resistance. Large development initiatives bring about socio-economic disruptions, fuelling existing anti-State sentiment. The article argues that the imperative to protect expanding economic assets has enabled the region’s further militarization, engendering an environment wherein the security-intelligence apparatus employs force inordinately and arbitrarily with impunity.

China's Belt and Road Initiative in Myanmar: Governance and State-Society Implications

Abstract: Sino-Myanmar relations entail a complex and deep-rooted web of connections linking state and non-state actors with state and private capital. Based on qualitative fieldwork conducted in 2019, this article argues that Chinese investments in Myanmar have exacerbated the precarious state-societal relations. Our argument is based on three interconnected reasons: the lack of engagement and corporate social responsibility in Chinese projects, China's engagement with Myanmar's Ethnic Armed Organizations (EAOs), and the large presence of Chinese capital in the country's informal and often illicit economy. Such dynamics have increased the anti-China sentiment and heightened frictions in an already fragmented political and economic situation. As a result, contrary to China's "win-win" claims, Belt and Road Inititative projects have not contributed to equitable socioeconomic developments but have exacerbated state-society tensions. We conclude by considering the implications of the 2021 coup d'état, its impact on Sino-Myanmar relations, and the prospects for BRI implementation.

Industrialization in an Age of China Rising: A Tale of Two Chinese Automobile Companies in Malaysia

Abstract: This article aims to contribute to the exploration of the ways through which Malaysia—the fourth largest economy in Southeast Asia—has engaged Chinese investment to pursue industrialization. It does so by comparing and contrasting the different approaches by which two of the most important Chinese-financed automobile projects, Chery Automobile's assembly operations in 2008 and Zhejiang Geely's partial acquisition of local producer Proton in 2017, have been embedded into the Malaysian political economy. While Chery Automobile ended up with a conundrum of extremely low local sales, Zhejiang Geely has fostered mutually beneficial partnerships with Proton and its cohort of suppliers that are shaped by the industry's ethnopolitical directives. More recently, Zhejiang Geely has exported an increasingly larger proportion of vehicles from its Malaysian operations. The contrasting fate of these projects illustrates that while they are driven by Chinese money and technological know-how, they are not necessarily Chinese-dominated. It is domestic politics—the establishment of a functional politico-commercial coalition in particular—that matters in shaping the outcome and impact of Chinese investment in Malaysia. More importantly, the paper highlights how foreign direct investment and the supposed (positive and negative) externalities are intimately tied to local factors such as political institutions and ethnocentric directives.

China’s image-building in Africa: The intersection of the media and economic development investment in Mali

Since the 2000s, China has deepened public relations in its engagement with Africa primarily through economic investment and assistance. The present work looks at China’s African public relations and the mechanism that shapes public perception of China, focusing on Mali. Mali is not a major destination for Chinese investment, yet public perceptions of China appear to be uniquely positive. How may we explain this trajectory? The work undertakes a longitudinal examination, comparing China’s economic developments in Mali (2010–20) with Malians’ perception of China’s influence on the Malian economy that shapes the general perception and attitude towards China (2010–20) and the media’s role in this process. Some questions guide this study: how do Chinese economic activities in Mali shape Malians’ perception of China? How does the media contribute (if any) to shaping Malian perception of China’s developmental programmes? Employing a mixed research method and a range of datasets, I find that economic investment does not necessarily shape positive public perception of China in Mali. Instead, how the public receives information about economic investments shapes and enhances a positive perception of China in Mali. Consequently, China would substantially enhance its image-building effort when its foreign economic development assistance is linked with public relations, making economic programmes more visible through media representations. I based the theoretical discussion on the media agenda-setting framework.

Contribution chinoise au développement du secteur agricole dans les régions du Centre et Sud Cameroun

Economic cooperation in the agricultural sector is a reality between Cameroon and China. This contribution presents and analyzes Chinese investments in the agricultural sector of the Central and Southern Cameroon regions from 1960 to 2023.The methodology of this study is centered on field observations, literature review and interviews with the actors in charge. Sino-Cameroonian cooperation on the agricultural component. These actors are localities of Nanga-Eboko, Meyomessala, Kribi and Niété. Socio-economic surveys were carried out among 200 producers in these localities. It emerges from the main results of the study that Chinese investments in the agricultural sector are involved in food, market gardening and cash crop agriculture (rubber). Nearly 37.5% of producers in these localities say they benefit from Chinese expertise and human resource management, while 32.5% appreciate the Chinese contribution to local development and the strengthening of extra-agricultural activities. Moreover, only 20% of producers are satisfied with China's action in the dynamics of agricultural development. The problems remain in this cooperation and the redefinition of new Chinese intervention strategies is desired so that these localities benefit more.

Group norms and policy norms trigger different autonomous motivations for Chinese investors in cryptocurrency investment

Cryptocurrency has become a hot area of global investment. Despite the increasing regulation of cryptocurrencies, some investors are still obsessed with investing in cryptocurrencies, and the reasons behind this are worth exploring. Emerging studies from a cryptocurrency behavioural perspective demonstrate that investments in cryptocurrency are influenced by a variety of factors, but ignore the objective factor of the political environment. Based on social norms theory, this article explores the impact of group norms and policy norms on Chinese investors’ autonomous motivation to invest in cryptocurrencies. This article adopts a questionnaire and investigates 727 Chinese investors. Research has found that: (1) Cryptocurrency investment is influenced by group norms and policy norms, and autonomous motivation serves as a mediator in the process. Group norms promote autonomous motivation among investors, thereby increasing cryptocurrency investment. Conversely, policy norms inhibit investors’ autonomous motivation and reduce cryptocurrency investment. (2) Cryptocurrency knowledge plays a moderating role between social norms and autonomous motivation. The moderating effects of investors’ subjective and objective knowledge of cryptocurrency in the model have no significant differences, showing a consistent suppressing effect on autonomous motivation. The findings suggest governments should focus on both regulations and public opinion. On the one hand, the government needs to strengthen and improve the laws and regulations related to cryptocurrencies. On the other hand, the government also needs to strengthen social supervision and exercise necessary control in the dissemination of cryptocurrency information.

The challenges to the mega infrastructure of China-Pakistan Economic Corridor in Pakistan

This article provides an argument for amending the China-Pakistan Economic Corridor (CPEC) in the 1973 Constitution of Pakistan. That will ensure accountability, reduce criticism of corruption, and secure Chinese investment in Pakistan. The study’s main question is why CPEC does not have constitutional protection in Pakistan, which is more investment than Pakistan’s annual budget. CPEC should reduce the sense of deprivation and inequality within Pakistan and ensure its transparency in various aspects. The CPEC Amendment can establish parliamentary oversight and reduce the deprivations of the provinces by electing members on a National Economic Council (NEC) formula and a regional basis. Furthermore, it can provide some basic constitutional framework for upcoming governments regarding heavy investment in infrastructure. The constitutional provisions of the flagship project can serve as an example for BRI member countries.

Soft law and Chinese investment dispute resolution with BRI countries

The article delves into the utilization of soft law as an effective mechanism for resolving investment disputes within the context of China's ambitious Belt and Road Initiative (BRI). With the resurgence of global investment and the expansion of BRI projects, the potential for disputes in investments has escalated. This article highlights the limitations of traditional dispute resolution methods, such as international investment arbitration and international commercial arbitration, including enforcement difficulties, high costs, and protracted proceedings. In contrast, soft law emerges as a flexible and efficient approach to address these challenges. The concept and characteristics of soft law are thoroughly explored, emphasizing its role as an alternative to conventional legal instruments. Soft law encompasses principles, codes of conduct, and rules, providing a broader range of subjects and facilitating tailored solutions adaptable to local conditions. Its inherent flexibility significantly enhances the efficiency of conflict resolution, reducing contractual and negotiation costs associated with more rigid legal frameworks. The application of soft law within the Chinese context is examined, highlighting the proactive role of Chinese institutions in incorporating soft law mechanisms. For instance, the Export-Import Bank of China (EximBank) incorporates soft law in its loan application process by requiring compliance with relevant environmental policies and standards of both China and the host country. This approach helps fill legal loopholes, ensures environmental protection, and promotes efficient dispute resolution. The article further argues that mediation, as a soft law-based dispute resolution mechanism, holds particular promise for resolving investment disputes. Mediation fosters a cooperative and collaborative environment, encouraging dialogue and negotiation between parties. Its introduction as an alternative to arbitration reduces costs and expedites the resolution process. Leveraging China's cultural tradition and appreciation for mediation, it is suggested that soft law, particularly mediation, can offer novel and effective pathways to address investment disputes arising from the BRI. By embracing the advantages of soft law, a more efficient and convenient dispute resolution mechanism can be established. This not only promotes the successful implementation of BRI projects but also contributes to enhancing China's national reputation, fostering stable relationships with participating countries, and creating a favorable environment for overseas investments. It is essential to establish a robust dispute resolution framework to ensure the smooth operation of the BRI and address the increasing number of investment disputes that may arise along its path. In conclusion, this article advocates for the adoption of soft law, particularly mediation, as a viable and effective approach to resolve investment disputes within the BRI framework. By harnessing the flexibility and efficiency of soft law mechanisms, a conducive environment for investment dispute resolution can be created, benefiting all parties involved and facilitating the realization of the Belt and Road Initiative's overarching goals.

Greening African economy: The role of Chinese investment and trade

AbstractGlobal warming and the rapid depletion of natural assets have made many countries anxious to find green growth strategies, including global partnerships and international business. China has positioned itself as the right partner for sustainable growth and development in Africa through different engagement routes. In this study, we employ fixed effects on a sample of 27 countries over 17 years to examine the impact of China's foreign direct investment and trade on green growth in Africa. Our results show that China's investment and trade affect green growth differently. We find that foreign direct investment and export have a negative impact on green growth. Contrarily, we find importation from China to increase green growth. Our results suggest that the growing presence of China in Africa through direct investment and exportation of natural resources is likely to hamper achieving the Sustainable Development Growth goals. However, countries can harness some benefits from importing sustainable products from China. Our study extends the green growth literature and informs policymakers of the need to pay attention to the effects of growing Chinese‐Africa engagement on attaining sustainable and greener growth. The results are robust to different identification techniques, including two‐stage least square and system generalised method of movement.

A double-edged sword: Chinese direct investment in Latin America

Under the ‘Belt and Road’ initiative, China has expanded its footprint in Latin America and Caribbean (LAC) and contributed to LAC FDI stock, as well as, gross fixed capital formation and GDP. Based on the firm-level Chinese investment data and GTAP database, this paper uses the computable general equilibrium model to estimate the influences of Chinese direct investment on LAC economies. Chinese ODI and the booming economy are the engines for LAC development, according to its contribution to GDP, and trade balance improvement. The rest of LAC economies, China and US benefit indirectly from Chinese investment as well. Each country gives its full play to its comparative advantages. However, it is cautious that the industries with resource endowments in LAC have expanded largely and squeezed out the production of manufactures, which makes LAC economies more dependent on the growth of Chinese economy.

Investment cooperation between Russia and China in the field of agriculture

The article studies the issue related to investment cooperation between the Russian Federation and the People’s Republic of China in the fi eld of agriculture. The author notes that since the beginning of the 21st century, cooperation between the Russian Federation and the People’s Republic of China has been growing at a large pace. There are important internal drivers for agricultural cooperation on both sides. At the same time, however, these same internal national priorities create certain limiting conditions for the future, and the issue of considering investment processes between the two countries seems relevant. In this article, the investment projects of Russia and China in the fi eld of agriculture were studied and their impact on the prospects for further activities was analyzed. In conclusion, the author comes to the fact that Russia’s desire for the development of the Far East, for which Chinese capital and labor power are crucial, is combined with concerns about excessive economic dependence, as well as the high migration of inner grounds by Chinese national. Agriculture-related concerns also include the depletion of land by Chinese farmers and a possible long-term diminishing of soil fertility due to intensive farming practices and the use of chemical fertilizers, resulting in instability and uncertainty in the political environment for Chinese investors.

The Role of Technology Transfer and Intellectual Property Protection in Investment in China and Southeast Asia

This article aims to explore the relationship and impact of technology transfer and intellectual property protection in Chinese investment within Southeast Asia. Against the backdrop of increasing globalization and cross-border collaboration, technology transfer has gained significant attention as a crucial means to promote innovation and international investment. However, the issue of intellectual property protection in the process of technology transfer has also raised widespread concerns. This study first provides an overview of the relevant theories and concepts related to technology transfer and intellectual property protection. Subsequently, it focuses on analyzing the challenges and opportunities faced by Chinese companies in their investments in Southeast Asia. Factors such as cultural differences, legal environments, and the uncertainty of intellectual property protection pose challenges to technology transfer. Nonetheless, technology transfer also presents opportunities for Chinese companies, including entry into new markets, accelerated innovation cycles, and enhanced competitiveness. In order to address challenges and leverage opportunities, companies need to formulate effective intellectual property protection strategies, underscore the importance of contracts and agreements, and strengthen international collaboration and cooperative innovation. Furthermore, the study points out in its future outlook that intelligent technology transfer and digital platforms will shape future developments. Exploration in emerging technological domains will bring forth new possibilities for technological collaboration. Governments play a pivotal role in this landscape, requiring strengthened establishment and enforcement of laws and regulations, promotion of talent development and exchange, and the advancement of sustainable development and social responsibility. Through the exploration of these issues, this research aims to provide valuable insights for the field of technology transfer and intellectual property protection, fostering the development of cross-border collaboration and innovation.

Factors Influencing International Infrastructure Investment: An Empirical Study from Chinese Investors

International economic cooperation accelerates the flow of capital, technology, labor, and other factors between different countries, which promotes global sustainable development. Building infrastructure construction is an important way to strengthen social development, and absorbing foreign capital is an effective way for developing countries to improve their infrastructure and to promote economic development. This study puts forward the factors that have influenced China’s investment in international engineering projects, and it constructs a panel data regression model for empirical testing. The study shows that, first, international infrastructure investment tends to select countries or regions with good condition of highway infrastructure. Second, international infrastructure investment tends to choose countries or regions with low development level of port and power infrastructure. Third, bilateral diplomatic visits play a significant role in promoting international infrastructure investment. Fourth, international infrastructure investment tends to choose countries or regions with good resource endowment. This study reveals the influencing factors and the mechanisms for the choices of location for China’s investment in international engineering projects, providing a theoretical framework for investors to optimize international infrastructure investment and management, as well as providing the policy references for developing countries to attract international infrastructure investment.

Foreign Investment, State Capitalism, and National Development in Borneo: Rethinking Brunei–China Economic Relations

Faced with dwindling oil and gas reserves, Brunei has been hard-pressed to diversify its reliance on hydrocarbon. China has emerged as an attractive prospect to the Brunei government, especially since the launch of the Belt and Road Initiative. This article analyses a few major Chinese projects in Brunei and postulates three interrelated arguments. Firstly, Chinese investors have targeted Brunei's natural resources and fiscal incentives. These firms have minimal interest in the Sultanate's small domestic market as they eye the export sector. Secondly, these projects have been orchestrated by China's provincially-owned state-owned enterprises (SOE) and private firms, instead of centrally- controlled SOEs. State support has generally been channelled to these projects in an at-arm's length manner. Thirdly, while Brunei is relatively skilled in attracting Chinese investors to further its own political economic goals, at least in the short-run, it is uncertain whether such capital exports have helped in ameliorating the structural limits of the country’s economy.