How does geopolitical uncertainty affect Chinese overseas investment in the energy sector? Evidence from the South China Sea Dispute

Zhen Yu, Yao Xiao and Jinpo Li

Energy Economics, 2021, vol. 100, issue C

Abstract: Based on Chinese outward foreign direct investment data, this study examines the impact of the South China Sea Dispute on China's overseas investments in oil & gas-related sectors. The South China Sea Dispute alarms a potential threat to China's energy supply. By applying a difference-in-difference estimation, we find that the South China Sea Dispute brings about an increase in the frequency of China's oil & gas-related investments to low-risk countries. The findings are robust under several specification tests. It indicates that under geopolitical uncertainty environment, energy-importers will reallocate energy investment in order to avoid the potential disruption of energy supply.

Keywords: Geopolitical event; China's outward FDI; Difference-in-difference (search for similar items in EconPapers)
JEL-codes: F21 F50 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:100:y:2021:i:c:s014098832100267x

DOI: 10.1016/j.eneco.2021.105361

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