Long‐term financing effects of Chinese non‐SOEs Belt and Road OFDI

Ling Huang, Haiyue Liu, Jack Hou and Fulong Xiao

Accounting and Finance, 2022, vol. 62, issue S1, 1819-1850

Abstract: Taking a political legitimacy perspective, this paper examines how the outward foreign direct investment (OFDI) of Chinese non‐state‐owned enterprises (non‐SOEs) in countries along the Belt and Road (B&R) affected their financing capabilities. It was found that the OFDI in B&R countries significantly increased the access of non‐SOE to long‐term and policy‐based loans, with this effect being more pronounced in firms that had stronger political connections and in areas that had greater political pressure, no prefecture‐level terminations of officials, and a lower marketisation degree. It was further found that the non‐SOE OFDI along the B&R improved the political performance of local officials and was an effective mechanism for enhancing financing capabilities.

Date: 2022
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