Working Paper: CEPR ID: DP17844
Authors: Christopher Clayton; Antonio Coppola; Amanda Dos Santos; Matteo Maggiori; Jesse Schreger
Abstract: We document the rise of China in offshore capital markets. Chinese firms use global tax havens to access foreign capital both in equity and bond markets. In the last twenty years, China's presence went from raising a negligible amount of capital in these markets to accounting for more than half of equity issuance and around a fifth of global corporate bonds outstanding in tax havens. Using rich micro data, we show that a range of Chinese firms, including both tech giants and SOEs, use these offshore centers. We conclude by discussing the macroeconomic and financial stability implications of these patterns.
Keywords: international monetary system
JEL Codes: E; F; G; H
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Chinese firms' use of tax havens (H26) | ability to attract foreign investment (F21) |
| Chinese firms' presence in offshore capital markets (G32) | rise in equity issuance (G24) |
| Chinese firms' presence in offshore capital markets (G32) | rise in corporate bonds issued through tax havens (G33) |
| use of Variable Interest Entity (VIE) structures (G32) | capital access for Chinese firms (G32) |
| foreign portfolio investment via tax haven affiliates (F64) | Chinese firms' presence in offshore capital markets (G32) |