Money backfires: How Chinese investment fuels anti-China protests abroad

• Published in: World development 2024-06, Vol.178, p.106566, Article 106566
• Main Authors: Gong, Do Young, Kim-Leffingwell, Sanghoon, Shen, Shuyuan, Yang, Yujeong
• Format: Article
• Language: English
• Subjects: Anti-China protest; FDI; Political competition
• ISSN: 0305-750X; 1873-5991
• DOI: 10.1016/j.worlddev.2024.106566

•Chinese FDI promotes anti-China protests, especially in countries with the suppressed and unregulated political competition.•Stable and institutionalized political competition mutes the effect of Chinese FDI on anti-China protests.•The pattern of increasing anti-China protests does not appear in the context of Chinese foreign aid or trade with China.•This study shows how the effect of Chinese FDI is contingent on host countries’ institutions and political contexts. China has been expanding its global economic presence through foreign direct investment, foreign aid, and trade. China’s growing economic influence, however, is inviting worries and suspicion in many countries, leading to the rise of anti-China protests. How and when does China’s economic expansion promote anti-China protests? We explore this question by examining the effect of Chinese FDI on the rise of anti-China protests across 127 countries. First, we argue that Chinese FDI promotes anti-China protests, but the effects are contingent on the level of political competition. We find that the effect of Chinese FDI on anti-China protests is particularly stronger in countries where citizens have limited institutional routes to express their grievances and pursue policy alternatives through political competition. Second, we find that the pattern of increasing anti-China protests does not appear in the context of Chinese foreign aid or trade with China. The finding that Chinese FDI backfires and incites anti-China protests has profound implications for our understanding of China’s global economic influence and its limits.