The Dalai Lama Effect
Image Credit: Luca Galuzzi

The Dalai Lama Effect

 
 

Meeting with the Dalai Lama can be fraught with political difficulties—just ask EU leaders, who in 2008 saw annual China-EU talks shelved for the first time in 11 years after French President Nicolas Sarkozy met with him.

But it seems there’s also a financial cost for meeting the Tibetan spiritual leader, at least according to a recent study published by the Social Science Research Network.

According to the authors, both from the University of Goettingen in Germany,‘Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China.’

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Using data from the United Nations and World Bank, the authors found that ‘official’ meetings between the Dalai Lama and the leadership of a country resulted in a cut in exports to China from that country of an average of 8.1 percent. This effect, the authors say, lasts about two years.

What’s most interesting about the findings is that they have only held true since 2002, when Hu Jintao took office as president.

As Alistair Thornton, China analyst with IHS Global Insight, notes, it could be a little more complicated than the government issuing an order from above in response to a visit. Commenting on the issue to CNN, Thornton noted: ‘The possibility remains that Chinese companies are taking it upon themselves to curb trade links, rather that it being a direct order from the highest levels.’

Still, the fact that there’s such a marked change between the reaction now and the pre-Hu years suggests even if there hasn’t been an official hardening, there remains a strong perception among Chinese importers that it’s in their best interests to curb links themselves.

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