Open or Cease the Fire: Chinese Arms Exports and Civil Conflicts

ABSTRACT Sparked by research on how the rise of China impacts other nations, we study the effects of Chinese arms exports on recipients' civil conflict incidence. By using an instrumental variable strategy that exploits annual shifts in the RMB exchange rate and a share variation in the propensity of receiving Chinese arms, we find that increasing Chinese arms sales reduces civil conflict incidence. We also provide underlying evidence suggesting that the estimate can be explained by the deterrent power of Chinese arms inflow as well as its positive spillovers that shift a portion of labor forces to newly developed arms industries.