Covid-19 and the China opportunity narrative: investment, trade, and the belt and road initiative

Kerry Liu

International Review of Applied Economics, 2022, vol. 36, issue 5-6, 697-724

Abstract: China’s rapid economic growth has generated many economic opportunities for the world through outward foreign direct investment, trade, and its iconic Belt and Road Initiative. This study aims to examine the effects of Covid-19 on the narratives of these China opportunities. Based on weekly datasets between May 2016 and May 2021 and employing Autoregressive Distributed Lag Models, this study finds the worldwide narratives on the roles of Chinese outward foreign direct investment, Chinese trade, and China’s Belt and Road Initiative have experienced a structural break after 2020. Before 2020, they were generally regarded as opportunities. During the pandemic, their roles have changed significantly. The outbreak of Covid-19 and its development in the world may play a critical role in this structural break. This study is broadly related to the debate around decoupling from China and the China opportunity paradigm. This study contributes to policy discussions by taking a new perspective and providing novel empirical evidence, and contributes to academia through its quantitative approach.

Date: 2022
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DOI: 10.1080/02692171.2022.2044458

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