Conditionality in Chinese bilateral lending

Mikael Andreas Mattlin, Nojonen Matti

Research output: Working paperDiscussion paperScientific

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.
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.
Original languageEnglish
Place of PublicationHelsinki
PublisherBank of Finland, Institute for Economies in Transition
Number of pages36
ISBN (Electronic)978-952-462-709-2
Publication statusPublished - 2011
MoE publication typeD4 Published development or research report or study

Fields of Science

  • 517 Political science
  • Kiina
  • luotonanto
  • luotot
  • kansainvälinen
  • Bofit-kokoelma
  • ehdollistaminen
  • lainaehdot
  • politiikkapankit

Cite this

Mattlin, M. A., & Matti, N. (2011). Conditionality in Chinese bilateral lending. (BOFIT Discussion Papers; No. 14/2011). Helsinki: Bank of Finland, Institute for Economies in Transition.
Mattlin, Mikael Andreas ; Matti, Nojonen. / Conditionality in Chinese bilateral lending. Helsinki : Bank of Finland, Institute for Economies in Transition, 2011. (BOFIT Discussion Papers; 14/2011).
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Mattlin, MA & Matti, N 2011 'Conditionality in Chinese bilateral lending' BOFIT Discussion Papers, no. 14/2011, Bank of Finland, Institute for Economies in Transition, Helsinki.

Conditionality in Chinese bilateral lending. / Mattlin, Mikael Andreas; Matti, Nojonen.

Helsinki : Bank of Finland, Institute for Economies in Transition, 2011. (BOFIT Discussion Papers; No. 14/2011).

Research output: Working paperDiscussion paperScientific

TY - UNPB

T1 - Conditionality in Chinese bilateral lending

AU - Mattlin, Mikael Andreas

AU - Matti, Nojonen

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AB - 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.

KW - 517 Political science

KW - Kiina

KW - luotonanto

KW - luotot

KW - kansainvälinen

KW - Bofit-kokoelma

KW - ehdollistaminen

KW - lainaehdot

KW - politiikkapankit

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Mattlin MA, Matti N. Conditionality in Chinese bilateral lending. Helsinki: Bank of Finland, Institute for Economies in Transition. 2011. (BOFIT Discussion Papers; 14/2011).