Has China’s Oil Investment in Belt and Road Initiative Countries Helped Its Oil Import?

Abstract

Energy cooperation is an important part of the Belt and Road Initiative (BRI). As China’s investment in One Belt One Road countries has increased substantially, a natural question is whether the investment in the BRI countries can contribute to its oil import since it is the most critical part of the national energy security strategy. By employing a dataset that includes the oil import from BRI countries and the oil-related investment in these countries, along with other control variables, an econometric analysis is conducted to investigate the relationship between these two variables. The estimation results provide supporting evidence for the hypothesis that China’s oil investment in BRI countries has helped enhance its oil security. Specifically, investment in BRI countries increases the oil import volume from the host country and diversifies China’s sources of imports. Further analysis also reveals that the effects do not differ by investment mode, e.g., greenfield or mergers and acquisitions (M&A).