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

Tianyi Wu

Development and Change, 2024, vol. 55, issue 6, 1259-1288

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.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/dech.12864

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:devchg:v:55:y:2024:i:6:p:1259-1288

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0012-155X

Access Statistics for this article

More articles in Development and Change from International Institute of Social Studies
Bibliographic data for series maintained by Wiley Content Delivery ().