Chinese official lending, infrastructure development and bilateral political alignment: The case of Africa

Clément Durif, Jean-Baptiste Monnier, Jean-François Di Meglio

Article ID: 9669
Vol 8, Issue 16, 2024

VIEWS - 57 (Abstract)

Abstract


This study investigates the link between debt and political alignment in international relations between the People’s Republic of China (PRC) and African nations. Using recorded roll-call votes on United Nations General Assembly (UNGA) resolutions, we explore whether PRC investment in sovereign debt influences the voting behaviour of loan recipient countries. We compile voting data for African countries from 2000 to 2020 to calculate an annual voting affinity score as a proxy for political alignment. Concurrently, data on Chinese public and publicly guaranteed (PPG) loans to African governments are collected. A Two-Stage Least-Squares analysis is employed, using the ratio of Chinese PPG debt to GDP as an instrument to address endogeneity. Results reveal a negative impact of Chinese lending on African political support, while trade, foreign direct investment (FDI), and Chinese GDP positively influence political alignment. In high debt-risk African countries, interest rates have a negative impact, whereas loan maturity shows a positive effect. These findings suggest that Chinese loans, particularly under commercial terms, may have strained bilateral relations due to debt sustainability concerns. Nevertheless, the positive impacts of trade and FDI may enhance international relations, highlighting the limitations of China’s loan diplomacy in fostering long-term strategic alignment in Africa.


Keywords


China; Africa; sovereign debt; debt-trap diplomacy; United Nations General Assembly; voting alignment; foreign direct investment; Two-Stage Least-Squares

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DOI: https://doi.org/10.24294/jipd9669

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