BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 14/2011:
Conditionality in Chinese bilateral lending
Mikael Mattlin ()
and Matti Nojonen
Abstract: China’s long insistence on non-interference and
sovereignty and frequent criticism of Western interventionism has
contributed to a widely held impression that China lends and invests abroad
without attaching policy conditions. This discussion paper surveys the
general policy debate on conditionality in lending, as well as China’s own
debate on conditionality. We then examine bilateral loans provided by
Chinese state-owned policy banks, notably China Exim Bank, arguing that the
assumption of China’s shunning conditionality is valid only if the term is
taken narrowly to imply the specific set of policy conditions (e.g.
privatisation and financial liberalisation) routinely called for by World
Bank Group lenders. Based on a literature review and analysis of loan
features along with tentative evidence from empirical cases of Chinese
bilateral lending, we identify four hypothetical types of conditionality:
political conditionality, embedded conditionality, cross-conditionality and
emergent conditionality. In all likelihood the last three types of
conditionality are not imposed by a unitary state actor, but emerge as an
indirect consequence of the voluminous business activities of Chinese
state-linked lenders and enterprises in developing countries.
Keywords: China; bilateral lending; conditionality; policy banks; (follow links to similar papers)
JEL-Codes: F34; F36; F59; (follow links to similar papers)
36 pages, June 21, 2011
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