International Submarine Optical Cables,Bilateral Information Flow and Chinese Cross-Border M&A
Submarine optical cables are the most important carrier of cross-border information,and they are of strategic significance in the digital economy era.This paper takes the Asia-Africa-Europe-1(AAE-1)submarine optical cable as an example to examine the impact of international submarine optical cable construction on China's cross-border M&A from a bilateral information flow perspective.Using SDC cross-border M&A data from 2009 to 2021 and the difference-in-differences(DID)technique,it finds that the opening of the AAE-1 submarine optical cable significantly boosts cross-border M&A by Chinese firms in directly connected countries.The mechanism analysis reveals that the AAE-1 submarine cable facilitates the cross-border economic activities of firms by increasing bilateral information flows between China and the respective countries.It is also observed that the promoting effect of submarine optical cables is stronger in countries with poorer initial digital infrastructure and greater network freedom,and that it mainly facilitates mergers and acquisitions in high-technology industries.Besides,the AAE-1 submarine cable has a strong spillover effect,which can lead to cross-border M&A in countries bordering the landing points.In conclusion,China-led construction of digital infrastructure can bridge the digital divide and promote China's high-tech go global.