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Chinese Outwards Mercantilism - the Art and Practice of Bundling

Joshua Aizenman, Yothin Jinjarak, Huanhuan Zheng

NBER Working Paper No. 21089
Issued in April 2015, Revised in May 2017
NBER Program(s):International Finance and Macroeconomics

The Global Financial Crisis (GFC) brought to the fore the limits of the Chinese export led-growth strategy and the need for Chinese rebalancing of its international business approaches. Our paper takes stock of what may be the new chapter of Chinese outward-mercantilism, which aims at securing a higher rate of returns on its net foreign asset position, leveraging its success in manufacturing exports, natural resource imports and RMB internationalization. Using micro-level project data and macroeconomic covariates, we find positive association of Chinese trade and financial flows with China’s outward direct investment (ODI). The relationship is stronger for ODI originated from the Chinese state-owned enterprises, and strengthened by the provision of RMB swap-line agreements with China’s trading partners. The evidences support the conjecture that Chinese ODI is bundled to trade and financial linkages with its investment and trading partners.

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Document Object Identifier (DOI): 10.3386/w21089

Published: Joshua Aizenman & Yothin Jinjarak & Huanhuan Zheng, 2018. "Chinese Outwards Mercantilism – the Art and Practice of Bundling," Journal of International Money and Finance, . citation courtesy of

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