Truly honored to present our recent Working Paper, written with Vanessa Strauss-Khan and Jérôme Creel at the Bank for International Settlements during a research webinar on Tuesday 17 February 2026. I am extremely grateful to Rafael Guerra for the invitation. Stay tuned for more information.
How Geopolitics Influence Chinese Firms’ Exports: Firm-Level Evidence of “Friendtrading” under Extreme Events
This paper investigates how geopolitical relationships shape Chinese exports, asking whether exporters systematically favor politically aligned countries-and whether that preference holds during periods of geopolitical turbulence. Unlike most existing studies, which focus on imports or multinational enterprises (MNEs) with a Western-centric perspective, we use a high-frequency panel of over 17 million monthly firm-product-destination export transactions from Chinese Customs (2000-2006). We match this data with the Political Relationship Index (PRI) developed by Tsinghua University to analyze how changes in bilateral political relations shape trade flows. Our empirical strategy relies on a robust log-linear specification with firm-product, destination-country, month and year fixed effects, and controls for tariff variation. We test for both asymmetric and non-linear effects by interacting the PRI with indicators of extreme positive and negative geopolitical events. Our results consistently show that stronger bilateral political relations significantly increase Chinese exports. We also find evidence of asymmetric responses: exporters react more strongly to diplomatic improvements than to deteriorations. Using extreme geopolitical events, we show that positive events amplify the export response to political alignment, while negative events tend to dampen it. This pattern is especially pronounced among foreign firms and exporters of differentiated products, suggesting that political alignment plays a critical role in global value chain dynamics. In a world of growing political fragmentation, our findings underline the growing interplay between diplomacy and international trade. They reveal that friendtrading is not just a policy discourse-it is already reflected in the strategic behavior of exporters.
My research has been presented in several central bank settings over the recent period, reflecting sustained engagement with policy-relevant empirical work: at the Bank of Thailand in May 2024 (during the ABD-PIER conference), the Bank of France in October 2024 (during a visiting scholar appointment), the European Central Bank in November 2024 (ECB research seminar of the Euro Area External Sector and Euro Adoption Division in the Directorate General Economics), the Bank of Finland in April 2025 (BOFIT research seminar during a visiting scholar appointment), the Bank of Korea in August 2025 (during the ABD-JIMF-BOK conference and a research seminar), the Bank of Israel (during the VIMM webinar) in September 2025, the Bank of Latvia in October 2025 (research seminar), the National Bank of Slovakia in January 2026 (research seminar), and the Bank of England in January 2026 (research seminar).
Three other seminars are planned in 2026: one at the Central Bank of Suriname, the second one at the Central Bank of the Republic of Türkiye, and the third one at the South African Reserve Bank. Stay tuned for more information.