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We apply the concept of geoeconomics to the example of Chinese state-owned commercial banks based in Luxembourg and their financial activities in the European Union. The case study links the uneven relationship between China and Luxembourg to the field of international finance via large Chinese state-owned banks as important but analytically neglected actors. In doing so, we analyze how economic resources are used by, through and between nation states in the pursuit of their strategic goals. Starting from the observation that Chinese banking networks primarily provide a platform for the implementation of direct investments by Chinese companies, we identify important mechanisms and practices of Chinese banks, their anchoring in Luxembourg and the limited fulfilment of Western policy makers’ expectations from the presence of the Chinese banks in Luxembourg. Furthermore, we analyze instruments and strategies that define important aspects and dimensions of the concept of geoeconomics and complement them with the agency attributed to Chinese banks. An interesting paradox emerges from our analysis: while the geoeconomic power of Chinese banks’ activities is limited by the strict adherence to Chinese state development guidelines, the new organization of the Chinese banking networks in the EU suggests that they will be able to exercise their geoeconomic power in the future; with corresponding implications for local economies and economic development in Europe.
|Title of host publication||The Political Economy of Geoeconomics: Europe in a Changing World|
|Editors||Milan Babić, Adam D. Dixon, Imogen T. Liu|
|Number of pages||24|
|Publication status||E-pub ahead of print - 14 Oct 2022|
|Name||International Political Economy Series (IPES)|
Bibliographical noteFunding Information:
Acknowledgements Paolo Balmas would like to thank the Luxembourg National Research Fund (FNR) for funding this research (Grant number 12502225). Sören Scholvin, Imogen T. Liu, Milan Babić and Adam D. Dixon provided valuable feedback, which we gratefully acknowledge. All errors remain, however, ours alone.
© 2022, The Author(s).
- International political economy
- Financial geography
- International financial centres
- 1 Finished
China-Lux: China's Financial Networks in Luxembourg
BALMAS, P., DÖRRY, S. & Howarth, D.
Fonds National de la Recherche-FNR
1/09/18 → 31/08/22
Chinese bank networks in Europe: FDI-oriented by legal and strategic designBalmas, P. & Dörry, S., 2 Mar 2023, (E-pub ahead of print) In: Eurasian Geography and Economics.
Research output: Contribution to journal › Article › peer-reviewOpen Access
Hierarchical tendencies, functional specializations, and (in)stability across European banking centersMusschoot, J., Derudder, B. & Dörry, S., 15 Mar 2023, (E-pub ahead of print) In: European Urban and Regional Studies.
Research output: Contribution to journal › Article › peer-review
Chinese state-owned bank expansion into Europe: Bank branches and subsidiariesBalmas, P. & Dörry, S., Feb 2021, The Global Network on Financial Geography (FinGeo), (Financial Geography Working Paper Series; no. 29).
Research output: Working paperOpen AccessFile
Lions and Dragons Building new financial marketsBalmas, P., Feb 2021, Luxembourg : Forum a.s.b.l.
Research output: Other contribution