In this SCCEI seminar Hong Kong University of Science and Technology faculty Albert Park discusses China's Belt and Road Initiative.
China’s Belt and Road Initiative (BRI) has attracted polarized debate over China’s motives with relatively little evidence. We analyze project-level data on China’s outbound foreign direct investments (FDI) and construction projects to examine several key questions related to the Initiative. First, we study the impact of the BRI on the amount of outbound FDI to BRI countries and examine whether the importance of economic, governance, and other factors in explaining China’s outbound FDI flows to different countries changed under the BRI. We find that after the BRI began, the importance of economic fundamentals declined while the importance of governance factors increased. Second, we quantify the role of state-owned enterprises in the Initiative and compare the nature and determinants of SOE investments to those made by private firms. Finally, to examine the impact of the Initiative on China’s soft power, we study changes in sentiment by using AI algorithms to conduct textual analysis of millions of media articles around the world.