State-Fueled Energy: Quantitative Comparison of State-Led Overseas Energy Financing in China and Japan
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State‑Fueled Energy: Quantitative Comparison of State‑Led Overseas Energy Financing in China and Japan Junda Jin1,2 Received: 31 October 2018 / Accepted: 19 July 2019 © Fudan University 2019
Abstract China and Japan own the largest policy banks—state-owned financiers—in the world. Policy banks have recently drawn international attention as the Export– Import Bank of China (CHEXIM) and China Development Bank (CDB) play an important role in China’s overseas economic activities. This paper examines the extent to which the CHEXIM and CDB behave similarly to the Japan Bank for International Cooperation (JBIC), their Japanese counterpart in energy loan approvals. Combining third-party data from a new database of Chinese overseas energy finance and various matching databases, this paper proposes a fixed-effect model to compare the determinants of the CHEXIM, CDB and JBIC’s overseas energy loans from a comparative perspective. Like their Japanese counterparts, Chinese banks exhibit a certain degree of concern for the recipient’s domestic economy but also exhibit riskseeking tendencies. Contrary to claims that China’s policy bank is a tool to gain geopolitical advantage, geopolitical concerns and energy security do not appear to be determinants of the CHEXIM’s overseas finance decisions. Keywords China · State-led finance · Energy · Japan · Overseas finance · Loan
1 Introduction China’s increasing overseas economic engagement in recent years, especially overseas trade and investment in energy and infrastructural sectors, are often considered part of the “Chinese state strategy” because many of these projects are supported by state-owned financiers known as “policy banks” (政策性银行 in mandarin). Some scholars suggest that the Chinese government financially supports overseas economic activities in pivotal sectors such as energy (Klare 2008; Gonzalez-Vicente * Junda Jin [email protected] 1
Global Development Policy Center, Boston University, 53 Baystate Rd., Boston, MA 02215, USA
2
Xiaonanzhuang Building 38, Unit 7‑752, Beijing 100089, China
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Vol.:(0123456789)
J. Jin
2013) to achieve the political goals of the Chinese government (Kamiński 2017). Moreover, various forms of China’s other official flows (OOF), including concessional loans1 (Brautigam 2009a, b) from policy banks, bear the features of both commercial loans and political-driven assistance (Brautigam 2011). However, other studies argue that policy banks have a certain degree of freedom, which makes them driven by profit and even contradicts state goals. As the “state background” of overseas Chinese economic activities (including trade and investment) is often a key concept in various policy debates in host countries, the western world and multilateral institutions, it is important for policy makers and scholars to understand to what extent policy banks represent the state in their overseas finance decisions. While the term “policy bank” is mainly used to describe Chinese banks such as the China Development Bank (CDB) or Export–Import Bank of China (CHEXIM)
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