Do Swap Lines Help China Win Friends and Influence? Evidence from Argentina

• In Event: Politics of International Finance

Abstract

The People’s Bank of China has signed bilateral swap agreements with dozens of foreign central banks since 2008, turning China into a major international lender of last resort. China’s swap lines have both economic and geopolitical objectives, which include increasing political support for China on the international stage. This paper examines whether China’s bilateral swaps shift foreign public opinion towards China. Our empirical analysis focuses on Argentina, which has actively used its swap line to help address the country’s severe economic difficulties. The Argentine case is therefore one where the economic benefits of the swap line are particularly large, making it a setting where the swap should be particularly likely to improve attitudes about China. However, drawing on evidence from a survey experiment conducted during the 2023 election period, we show that priming Argentine citizens about Chinese financial assistance does not increase the average citizen’s desire to strengthen ties with China. Instead, we find that Chinese financial assistance has a polarizing effect on public opinion: it increases support for China among those who favor the incumbent party, but reduces support for China among opposition voters. In sum, Chinese financial assistance does not uniformly improve the country’s image, and actually worsens the country’s standing among some segments of the population. This suggests there are limits, when it comes to public opinion, for China’s “bailout” diplomacy.

Authors

• Daniel McDowell, Syracuse University

• David A. Steinberg, Johns Hopkins University