Zhengrui Cheng

PhD Candidate in Economics, Georgetown University

International Trade and Industrial Organization

On the 2026–27 job market. PhD expected 2027.

Zhengrui (Mike) Cheng

I study international trade, foreign direct investment, production networks, and industrial organization. My research examines how firms, sourcing relationships, and market structure shape the organization of global value chains.

Research

Job Market Paper

Going Overseas: FDI Decisions and Supply-Chain Integration

Zhengrui Cheng

Draft, October 2026.

Chinese outward FDI is followed by measurable reorientation of host-country supply networks toward Greater China.

Abstract

Does outward FDI pull host-country sourcing toward the investing country’s suppliers? Linking Chinese investment projects in 161 countries over 2005–2024 to bilateral trade data and firm-to-firm supplier networks, I show that it does, in two measurable senses: host sectors source more from China, and host firms’ supplier networks become China-linked. In a matched difference-in-differences design, host-country upstream sectors whose downstream customers receive Chinese investment raise the share of imports sourced from Greater China by 1.4 percentage points, about 9 percent of the mean share. Event-study estimates at the firm level show that investment recipients more than double the share of their suppliers located in Greater China. Their own suppliers also become more connected to China through their buyers and suppliers, with no significant increase in exposure to other foreign suppliers. Relative to peer source countries, China’s FDI is also concentrated in host-sector markets where this channel has the most scope. A model in which the state screens outward investment on private profit and home-supplier benefits organizes the three results. Outward FDI can thus work as a channel of supply-chain integration, extending the investing country’s supply network beyond the affiliates it owns.

Main results
Table 1: reduced-form estimates of downstream Chinese investment exposure on China import shares, by value and quantity, for the full sample and manufacturing.
Reduced-form estimates: downstream Chinese investment exposure and China import shares
Event study of the direct Greater China supplier share around Chinese investment.
Direct Greater China supplier share around Chinese investment
Event study of the indirect China embedding index around Chinese investment.
Indirect China embedding index around Chinese investment
Event study of the upstream China-linked supplier share around Chinese investment.
Upstream China-linked supplier share around Chinese investment

Presentations: AEA Annual Meeting, Trade and FDI session, Philadelphia, 2026; Georgetown University Trade Lunch; AEA Annual Meeting, ODE Graduate Student Research Award Session, Washington, DC, 2027 (scheduled).

Working Papers

Exporting Automation, Not Just Goods: Evidence from China’s Industrial Robot Exports

with Shiliang Cui and Lizhi Liu

Reject and resubmit at Manufacturing & Service Operations Management

Abstract

This paper provides the first systematic analysis of who imports China’s industrial robots, why they do so, and how competitive these robots are in global markets. Using bilateral trade data from 2005–2022, we document a structural transformation in China’s position in global robotics trade: China has shifted from a net importer to a net exporter of industrial robots. Its exports are disproportionately directed toward emerging manufacturing hubs, particularly in Southeast Asia. Although Chinese robots are generally less technologically advanced than those produced by Japan, Germany, the United States, and South Korea, they offer the strongest “bang for the buck.” These “good-enough” robots are especially attractive to price-sensitive, lower-income economies that are becoming new manufacturing platforms amid global supply-chain reconfiguration. Consistent with this mechanism, we document a U-shaped relationship between robot imports and GDP per capita: high-income economies adopt frontier robots to offset high labor costs, whereas low-income economies rely on cost-effective Chinese robots to compensate for weaker labor quality rather than high wages. Finally, using a fully specified general equilibrium framework, we conduct counterfactual policy simulations to evaluate how geopolitical and industrial policy shocks affect China’s robot exports, relative wages, and global welfare. Our findings suggest that China is increasingly exporting production capability—not just products. More broadly, contrary to the view that automation substitutes for offshoring, our results show that cost-effective robots can travel with production as manufacturing relocates to lower-wage economies.

Presentations: Georgetown McDonough School of Business, PE Lunch; Washington University in St. Louis, PE Workshop (scheduled).

Multinational Production and Domestic Value Capture: Cross-Country Evidence on Domestic Sourcing

with Weining Xin (International Monetary Fund)

Work in progress

Abstract

When multinational production expands, how much reaches domestically owned firms, and what distinguishes the industries in which foreign production becomes embedded in the host economy? We answer using the 2026 OECD Analytical Activities of Multinational Enterprises system, which splits production and input flows by ownership for 80 economies and 41 sectors from 2000 to 2022. Shift-share IV local projections show that, conditional on the exclusion restriction, a 10 percent current-dollar increase in MNE value added predicts 1.36 percent more domestic-owned value added on impact and 4.35 percent more after five years. The five-year response is about twice as large where MNEs source heavily from domestic-owned suppliers, although the instrumented interactions are imprecise. We then construct SupplyFit, which measures how closely domestic production capacity matches each MNE industry’s input needs. Within the same host, industries at the 90th rather than the 10th percentile of persistent SupplyFit source 5.55 percentage points more inputs from domestic firms. A one-standard-deviation annual improvement, however, predicts only 0.17 percentage points more domestic sourcing on impact. Attracting MNE production and embedding it are therefore distinct development objectives: scale creates opportunities for domestic gains, but alignment between domestic capabilities and MNE input needs predicts who captures them.

Presentations: IMF Asia and Pacific Department Seminar; AEA Annual Meeting, Poster Session, Washington, DC, 2027 (scheduled).

Publication

Foreign Direct Investment, Trade Finance and Global Value Chain Integration

with Xiang Ding and Marc Auboin (WTO)

Chapter 6 in Global Value Chain Development Report 2025: Rewiring GVCs in a Changing Global Economy

Abstract

This chapter reconceptualizes the financial architecture of Global Value Chains (GVCs), arguing that Foreign Direct Investment (FDI) provides the structural foundation while Trade and Supply Chain Finance (TF/SCF) ensures operational fluidity. Using a gravity framework, we first show that trade and FDI have distinct financial underpinnings: trade is more sensitive to bilateral stock market development, while FDI responds more to private credit depth. Next, we apply network analysis to distinguish productive investment from “phantom FDI,” revealing a resilient “real economy” network where trade and FDI centrality remain highly correlated once tax havens are excluded. Finally, our econometric analysis provides evidence of “GVC assimilation,” showing that FDI fosters convergence in the use of capital inputs between source and host countries—a key channel for capital-embodied technology transfer—but not in intermediate inputs. We conclude that deep GVC integration requires a dual policy strategy that supports both long-term investment and the short-term financing that allows local firms to connect and upgrade within these global production networks.

Main results
Gravity model results for 2019 with standardized bilateral financial variables.
Gravity model results, 2019: standardized bilateral financial variables
Global economic indicators, consolidated, 1990 to 2023.
Global economic indicators, 1990–2023
Trade versus FDI centrality including tax havens, stable panel of 163 countries.
Trade vs. FDI centrality, including tax havens (163 countries)
Trade versus FDI centrality excluding tax havens, 141 countries.
Trade vs. FDI centrality, excluding tax havens (141 countries)

Presentations: GVC Development Report 2025 Launch Event, Washington, DC; ADB and IDE-JETRO Joint GVC Webinar Series; Cambodia Anti-Corruption Unit Research Seminar.

Other Projects

From Autoregression to Trade Insight: A Scalable Forecasting Framework for Bilateral Flows

with Yitian Zhang

Technical note for the AI for Trade Challenge, October 2025

Abstract

This paper introduces a forecasting framework developed for the AI for Trade Challenge, targeting monthly bilateral trade flows at a high level of product granularity. We construct a model that predicts October 2025 trade values between the United States, China, and their top trading partners at the HS4-product level using a combination of machine learning and time-series baselines. The model incorporates over twenty macroeconomic, financial, and commodity indicators as exogenous drivers. Using LightGBM with a Tweedie loss function, the model handles the zero-inflated, heavy-tailed nature of trade data. Internal cross-validation indicates promising performance, with sMAPE of 43.22% and a total predicted trade volume of $156.4 billion. We discuss the model’s construction, performance, and broader implications for forecasting disaggregated trade flows.

References

  • Nathan Miller (Co-advisor)

    Professor, McDonough School of Business and Department of Economics

    Georgetown University

    nhm27@georgetown.edu
  • Xiang Ding (Co-advisor)

    Assistant Professor of Economics, School of Foreign Service

    Georgetown University

    xiang.ding@georgetown.edu
  • Nuno Limão

    Wallenberg Chair Professor, School of Foreign Service

    Georgetown University

    nuno.limao@georgetown.edu

Education

  1. Georgetown University

    PhD in Economics

    Graduate Scholarship

  2. University of Chicago, Harris School of Public Policy

    Master of Arts in Public Policy; Certificates in Research Methods and Financial Policy

    Harris Merit Scholarship

  3. Carnegie Mellon University

    Bachelor of Arts in Behavioral Economics, Policy and Organization; Minors in International Relations and Politics, and Economics

    University Honors; Omicron Delta Epsilon Honor Society