Working Paper: NBER ID: w12072
Authors: Agata Antkiewicz; John Whalley
Abstract: We discuss recent cases of Chinese buyout activity in the OECD (especially in the US and the EU) in resource and manufacturing sectors. While most of the buyout attempts have been unsuccessful, they can serve as a catalyst for a wider discussion on the implications for global arrangements over cross border acquisitions. Three specific issues are discussed. The first is the subsidization of purchase raised in the OECD in response to the advancing of low- or no-interest loans by the Chinese Central Bank to companies investing abroad. The second is the transparency of entities involved in the buyout attempt. Most Chinese companies have close ties to the multiple levels of government and are not subject to the standard reporting requirements as required of OECD companies. The third involves national security concerns in the OECD and the possibility of acquiring sensitive technology by Chinese companies when they purchase companies abroad. These issues have not been addressed in the existing OECD/WTO investment policy initiatives and have yet to be discussed in the global fora.
Keywords: No keywords provided
JEL Codes: F02; F20; F21; O24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Subsidization (through low or no-interest loans from the Chinese central bank) (H81) | Competitive behavior of Chinese SOEs (F23) |
| Competitive behavior of Chinese SOEs (F23) | Acquisitions that would not otherwise occur (G34) |
| Lack of transparency in the structure and governance of Chinese SOEs (G38) | Risks for foreign partners and investors (F23) |
| Lack of transparency in the structure and governance of Chinese SOEs (G38) | Financial instability or mismanagement post-acquisition (G34) |
| Acquisition of sensitive technology by Chinese firms (L63) | Risks to national security of acquiring countries (F52) |