Working Paper: NBER ID: w30865
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: tax havens; offshore capital markets; Chinese firms; foreign investment; financial stability
JEL Codes: F3; G10; G30; H87
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Offshore tax havens (H26) | Increase in capital-raising capabilities of Chinese firms (G32) |
| Utilizing offshore structures (G32) | Circumvent domestic investment restrictions (F21) |
| Offshore entities (F23) | Increase in overall capital available to Chinese firms (G32) |