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Fueling Global Energy Finance: The Emergence of China in Global Energy Investment

Sucharita Gopal (), Joshua Pitts (), Zhongshu Li (), Kevin P. Gallagher (), James G. Baldwin () and William N. Kring ()
Additional contact information
Sucharita Gopal: Global Development Policy Center, Boston University, Boston, MA 02215, USA
Joshua Pitts: Global Development Policy Center, Boston University, Boston, MA 02215, USA
Zhongshu Li: Woodrow Wilson School of Public and International Affairs, Princeton University, Princeton, NJ 08540, USA
Kevin P. Gallagher: Global Development Policy Center, Boston University, Boston, MA 02215, USA
James G. Baldwin: Global Development Policy Center, Boston University, Boston, MA 02215, USA
William N. Kring: Global Development Policy Center, Boston University, Boston, MA 02215, USA

Energies, 2018, vol. 11, issue 10, 1-25

Abstract: Global financial investments in energy production and consumption are significant since all aspects of a country’s economic activity and development require energy resources. In this paper, we assess the investment trends in the global energy sector during, before, and after the financial crisis of 2008 using two data sources: (1) The Dealogic database providing cross-border mergers and acquisitions (M&As); and (2) The “fDi Intelligence fDi Markets” database providing Greenfield (GF) foreign direct investments (FDIs). We highlight the changing role of China and compare its M&A and GF FDI activities to those of the United States, Germany, UK, Japan, and others during this period. We analyze the investments along each segment of the energy supply chain of these countries to highlight the geographical origin and destination, sectoral distribution, and cross-border M&As and GF FDI activities. Our paper shows that while energy accounts for nearly 25% of all GF FDI, it only accounts for 4.82% of total M&A FDI activity in the period 1996–2016. China’s outbound FDI in the energy sector started its ascent around the time of the global recession and accelerated in the post-recession phase. In the energy sector, China’s outbound cross-border M&As are similar to the USA or UK, located mostly in the developed countries of the West, while their outbound GF investments are spread across many countries around the world. Also, China’s outbound energy M&As are concentrated in certain segments of the energy supply chain (extraction, and electricity generation) while their GF FDI covers other segments (electricity generation and power/pipeline transmission) of the energy supply chain.

Keywords: FDI; M&A; energy; supply chain; inbound investment; outbound investment; Belt and Road (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
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