IDEAS home Printed from https://ideas.repec.org/a/bla/devchg/v55y2024i6p1259-1288.html
   My bibliography  Save this article

The Political Economy of Variations in Energy Debt Financing by Two Chinese Policy Banks in Africa

Author

Listed:
  • Tianyi Wu

Abstract

This article examines the puzzle of why China's two policy banks, China Development Bank (CDB) and the Export‐Import Bank of China (Eximbank), have lending portfolios for power‐generation projects in Africa that have drastically different levels of carbon dioxide emissions. From the supplier side, Eximbank balances two imperatives: Beijing's ideational ambition as a new development provider to African recipients with sustainability commitments, and China's industrial goal to offshore non‐renewable capacity. In contrast, the CDB prioritizes its commercial interests, which results in the bank lending solely for coal projects. On the demand side, Eximbank's concessional capital has emerged as a second‐best option among international financial sources for renewable and hydropower generation projects. Conversely, CDB's market‐rate lending makes it the fiscal last resort for host countries seeking financial support for thermal‐power projects which are shunned by other financiers. This divergence can be understood through the polycentric development finance model, which captures the parallel decision‐making institutions governing Chinese energy financing in Africa. Specifically, the lending decisions of Eximbank are linked with institutionalized policy processes, translating priorities of Chinese and African state actors. Meanwhile, the loan origination processes of CDB are more independent of state actors, allowing greater autonomy for the financier to pursue commercial interests.

Suggested Citation

  • Tianyi Wu, 2024. "The Political Economy of Variations in Energy Debt Financing by Two Chinese Policy Banks in Africa," Development and Change, International Institute of Social Studies, vol. 55(6), pages 1259-1288, November.
    • Handle: RePEc:bla:devchg:v:55:y:2024:i:6:p:1259-1288
    DOI: 10.1111/dech.12864
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/dech.12864
    Download Restriction: no
    File URL: https://libkey.io/10.1111/dech.12864?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Deborah Bräutigam & Kevin P. Gallagher, 2014. "Bartering Globalization: China's Commodity-backed Finance in Africa and Latin America," Global Policy, London School of Economics and Political Science, vol. 5(3), pages 346-352, September.
    2. Acker, Kevin & Brautigam, Deborah, 2021. "Twenty Years of Data on China's Africa Lending," SAIS-CARI Briefing Papers 04/2021, Johns Hopkins University, School of Advanced International Studies (SAIS), China Africa Research Initiative (CARI).
    3. Charles Gore & Jiajun Xu & Richard Carey, 2015. "Post‐2015 Global Governance of Official Development Finance: Harnessing the Renaissance of Public Entrepreneurship," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(6), pages 856-880, August.
    4. Tom Goodfellow, 2020. "Finance, infrastructure and urban capital: the political economy of African ‘gap-filling’," Review of African Political Economy, Taylor & Francis Journals, vol. 47(164), pages 256-274, April.
    5. Estache, Antonio, 2010. "Infrastructure finance in developing countries: An overview," EIB Papers 8/2010, European Investment Bank, Economics Department.
    6. Xia, Ying & Chen, Muyang, 2023. "The Janus face of stateness: China's development-oriented equity investments in Africa," World Development, Elsevier, vol. 162(C).
    7. Alden, Christopher & Jiang, Lu, 2019. "Brave new world: debt, industrialization and security in China–Africa relations," LSE Research Online Documents on Economics 101016, London School of Economics and Political Science, LSE Library.
    8. Brautigam, Deborah & Hwang, Jyhjong, 2016. "Eastern Promises: New Data on Chinese Loans in Africa, 2000 to 2014," SAIS-CARI Working Papers 2016/4, Johns Hopkins University, School of Advanced International Studies (SAIS), China Africa Research Initiative (CARI).
    9. William Butterfield & Vivien Foster & Chuan Chen & Nataliya Pushak, 2009. "Building Bridges : China's Growing Role as Infrastructure Financier for Sub-Saharan Africa," World Bank Publications - Books, The World Bank Group, number 2614.
    10. Brautigam, Deborah & Huang, Yufan & Acker, Kevin, 2020. "Risky Business: New Data on Chinese Loans and Africa's Debt Problem," SAIS-CARI Briefing Papers 03/2020, Johns Hopkins University, School of Advanced International Studies (SAIS), China Africa Research Initiative (CARI).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xia, Ying & Chen, Muyang, 2023. "The Janus face of stateness: China's development-oriented equity investments in Africa," World Development, Elsevier, vol. 162(C).
    2. Tom Goodfellow & Zhengli Huang, 2021. "Contingent infrastructure and the dilution of ‘Chineseness’: Reframing roads and rail in Kampala and Addis Ababa," Environment and Planning A, , vol. 53(4), pages 655-674, June.
    3. Tom Ogwang & Frank Vanclay, 2021. "Resource-Financed Infrastructure: Thoughts on Four Chinese-Financed Projects in Uganda," Sustainability, MDPI, vol. 13(6), pages 1-22, March.
    4. Botchie, David & Sarpong, David & Meissner, Dirk, 2022. "Chain upgrading, technology transfer, and legitimacy: The Schumpeterian character of China in the information and communication technology sector in SSA," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    5. Xu, Jiajun & Ru, Xinshun & Song, Pengcheng, 2021. "Can a new model of infrastructure financing mitigate credit rationing in poorly governed countries?," Economic Modelling, Elsevier, vol. 95(C), pages 111-120.
    6. Sierra, Jazmin & Hochstetler, Kathryn, 2017. "Transnational activist networks and rising powers: transparency and environmental concerns in the Brazilian National Development Bank," LSE Research Online Documents on Economics 79089, London School of Economics and Political Science, LSE Library.
    7. Becker, Jonathon M., 2021. "General equilibrium impacts on the U.S. economy of a disruption to Chinese cobalt supply," Resources Policy, Elsevier, vol. 71(C).
    8. Marson, Marta & Savin, Ivan, 2022. "Complementary or adverse? Comparing development results of official funding from China and traditional donors in Africa," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 189-206.
    9. Schclarek, Alfredo & Xu, Jiajun & Amuchastegui, Pedro, 2022. "Panda bond financing of the Belt and Road Initiative: An analysis of monetary mechanisms and financial risks," Research in International Business and Finance, Elsevier, vol. 61(C).
    10. Horn, Sebastian & Reinhart, Carmen M. & Trebesch, Christoph, 2021. "China's overseas lending," Journal of International Economics, Elsevier, vol. 133(C).
    11. J. Alexander Nuetah & Xian Xin, 2019. "Has China’s Investment Pattern in Sub-Saharan Africa Been Driven by Natural Resource Quest?," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 11(3), pages 215-231, September.
    12. Efem N. Ubi, 2014. "Foreign Aid and Development in Sino-African Relations," Journal of Developing Societies, , vol. 30(3), pages 243-272, September.
    13. Sebastian Purwins, 2023. "Same Same, but Different: Ghana’s Sinohydro Deal as Evolved ‘Angola Model’?," Insight on Africa, , vol. 15(1), pages 46-70, January.
    14. Wang, Yuan, 2022. "Presidential extraversion: Understanding the politics of Sino-African mega-infrastructure projects," World Development, Elsevier, vol. 158(C).
    15. Justin Yifu Lin & Yan Wang, 2016. "Special Section: China's Growing Trade and its Role to the World Economy," Pacific Economic Review, Wiley Blackwell, vol. 21(1), pages 102-117, February.
    16. Clifton, Judith & Díaz-Fuentes, Daniel & Revuelta, Julio, 2014. "Financing utilities: How the role of the European Investment Bank shifted from regional development to making markets," Utilities Policy, Elsevier, vol. 29(C), pages 63-71.
    17. Miao Miao & Jiang Yushi & Dinkneh Gebre Borojo, 2020. "The Impacts of China–Africa Economic Relation on Factor Productivity of African Countries," Economies, MDPI, vol. 8(2), pages 1-30, June.
    18. Inderst, Georg, 2020. "Social Infrastructure Finance and Institutional Investors. A Global Perspective," MPRA Paper 99239, University Library of Munich, Germany.
    19. Roy Bahl & Richard M. Bird, 2014. "Decentralization and Infrastructure: Principles and Practice," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1408, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    20. Yin-Wong Cheung & Jakob Haan & XingWang Qian & Shu Yu, 2014. "The Missing Link: China's Contracted Engineering Projects in Africa," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 564-580, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:devchg:v:55:y:2024:i:6:p:1259-1288. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0012-155X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.