Digital China Effect: Belt and Road Initiative and cyber protectionism in emerging countries

The idea that China's system of governance, which has achieved rapid economic growth through a one-party system, has an impact on other countries is gaining popularity. In this talk we call this hypothetical mechanism the China Effect. We examine whether the China Effect can be observed in the context of the global progress of digitalisation in the 2010s. To empirically tackle this issue, we focus on the policy transfer of digital protectionism via China’s Belt and Road Initiative (BRI). A possible pathway for China's protectionist practices to spread to relevant countries is through the various channels of the initiative as well as bilateral agreements including memorandums of understanding. After briefly reviewing domestic digital protectionism in China, we conduct an event studies estimation. Results suggest that the countries involved in the initiative have strengthened their regulation of digital services, however, the effect of treatment is largely heterogeneous. To further examine underlying mechanisms, we also conduct case studies. Our findings suggest that discussion around the China Effect needs to focus more on the heterogeneous impacts and two-way influences of the countries involved. As the results suggest some emerging countries have stronger incentives to absorb the Chinese model, the findings have important implications for the foreign policymaking of countries like Canada, Japan, and the United States.

 

 

Asei ITO is an Associate Professor at the Institute of Social Science, the University of Tokyo. He obtained PhD in Economics from Graduate school of Economics, University of Keio, Japan. His research covers Chinese industrial development, outward FDI activities, and innovation. He is one of editors of China’s Outward Investment Data (Institute of Social Science, the University of Tokyo, 2014) and The Asian Economy: Contemporary Issues and Challenges (Routledge, 2020). Also, he is a recipient of academic prizes including Yomiuri-Yoshino Sakuzo Prize and Masayoshi Ohira Memorial Prize. Currently he stays at Harvard Yenching-Institute as visiting scholar (2022-2023).