Article: China's Digital Silk Road investment effect: a boon for European countries or a danger to security? Journal: European Journal of International Management (EJIM) 2024 Vol.23 No.2/3 pp.387 - 411 Abstract: In recent years, some European countries worry that China was using the Digital Silk Road (DSR) to enable recipient countries to adopt its model of technology-enabled authoritarianism, which would be detrimental to national security in those countries. This paper evaluates the DSR investment effect of the Belt and Road Initiative (BRI) using the Difference-in-Difference-in-Differences (DDD) model by exploring country-sector-year panel data based on the China Global Investment Tracker database from 2005 to 2018. Our study finds that the BRI has significantly increased DSR investments by Chinese enterprises in the BRI countries of Europe without causing a significant rise in questionable transactions. Therefore, the 'A Danger to Security' narrative that the DSR aims to take over European recipient countries' sovereignty through technology financing is not supported by evidence. Discussions on sub-samples reveal that the BRI mainly promotes state-owned enterprises' DSR investment and that the preferred entry mode is cross-border merges and acquisitions. The findings help enrich the understanding of the investment effects of DSR and the understanding of micro-foundations toward internationalisation from an empirical perspective. Inderscience Publishers - linking academia, business and industry through research

Title: China's Digital Silk Road investment effect: a boon for European countries or a danger to security?

Authors: Ping Lv; Pengqi Liu; Waner Xu

Addresses: School of Economics and Management, University of Chinese Academy of Sciences, Beijing, China ' Sino-Danish College, University of Chinese Academy of Sciences, Beijing, China ' Sino-Danish College, University of Chinese Academy of Sciences, Beijing, China

Abstract: In recent years, some European countries worry that China was using the Digital Silk Road (DSR) to enable recipient countries to adopt its model of technology-enabled authoritarianism, which would be detrimental to national security in those countries. This paper evaluates the DSR investment effect of the Belt and Road Initiative (BRI) using the Difference-in-Difference-in-Differences (DDD) model by exploring country-sector-year panel data based on the China Global Investment Tracker database from 2005 to 2018. Our study finds that the BRI has significantly increased DSR investments by Chinese enterprises in the BRI countries of Europe without causing a significant rise in questionable transactions. Therefore, the 'A Danger to Security' narrative that the DSR aims to take over European recipient countries' sovereignty through technology financing is not supported by evidence. Discussions on sub-samples reveal that the BRI mainly promotes state-owned enterprises' DSR investment and that the preferred entry mode is cross-border merges and acquisitions. The findings help enrich the understanding of the investment effects of DSR and the understanding of micro-foundations toward internationalisation from an empirical perspective.

Keywords: Digital Silk Road; Belt and Road Initiative; investment effect; national security; European countries.

DOI: 10.1504/EJIM.2024.138663

European Journal of International Management, 2024 Vol.23 No.2/3, pp.387 - 411

Received: 06 Dec 2021
Accepted: 17 May 2022
Published online: 23 May 2024 *

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Title: China's Digital Silk Road investment effect: a boon for European countries or a danger to security?

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