IDEAS home Printed from https://ideas.repec.org/a/taf/cnpexx/v25y2020i3p453-468.html
   My bibliography  Save this article

State Actors, Market Games: Credit Guarantees and the Funding of China Development Bank

Author

Listed:
  • Muyang Chen

Abstract

This paper explores the role of the state in development by examining the funding mechanism of China Development Bank (CDB), the world's largest development bank. In recent decades, CDB has gained its international reputation by lending massively to infrastructure projects inside and outside China. At first glance, this seems a typical story of state-led development, i.e. the state channels preferential capital to selected projects, thereby allowing policy-oriented investments to take place. But in fact, CDB raises most of its funds from the capital market. How can CDB afford loaning mostly to the usually long-term and low-profit public projects if its funding is directed by profit-driven market incentives? What does CDB's fund-raising mechanism reflect about state-market relations in China and the role of the state in development? The answers, this paper argues, lie in the state's guarantee for CDB bonds. Receiving credit ratings as high as government bonds, CDB supplements fiscal spending and creates a bond market of which the bank itself is a dominant player. Using quantitative data, historical documents and interviews, and comparing CDB to its counterparts in Japan and Germany, this paper characterises a mutually constitutive state–market relation in development finance.

Suggested Citation

  • Muyang Chen, 2020. "State Actors, Market Games: Credit Guarantees and the Funding of China Development Bank," New Political Economy, Taylor & Francis Journals, vol. 25(3), pages 453-468, April.
  • Handle: RePEc:taf:cnpexx:v:25:y:2020:i:3:p:453-468
    DOI: 10.1080/13563467.2019.1613353
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13563467.2019.1613353
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/13563467.2019.1613353?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Naqvi, Natalya, 2022. "Economic crisis, global financial cycles, and state control of finance: public development banking in Brazil and South Africa," LSE Research Online Documents on Economics 115781, London School of Economics and Political Science, LSE Library.
    2. Hongying Wang, 2021. "Regime Complexity and Complex Foreign Policy: China in International Development Finance Governance," Global Policy, London School of Economics and Political Science, vol. 12(S4), pages 69-79, May.
    3. Gong, Xue, 2021. "Logics of appropriateness: Explaining Chinese Financial Institutions’ weak supervision of overseas financing," World Development, Elsevier, vol. 142(C).
    4. Fan, Wei & Ying, Qianwei & Meng, Guo, 2023. "The signaling effect of policy loans: Do commercial banks follow up or stand by?," Finance Research Letters, Elsevier, vol. 56(C).

    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:taf:cnpexx:v:25:y:2020:i:3:p:453-468. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/cnpe20 .

    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.