Description
The paper answers to a key research question: Why does China (continue to) engage with multilateral development finance institutions (MDFIs) despite the effectiveness and convenience in reaching national political and economic objectives through bilateral overseas development lending? The existing literatures of international development finance tend to distinguish China’s bilateral development lending, sourced from its various domestic financial institutions to the developing world, from its participation in MDFIs such as the World Bank and Asian Development Bank. The former is often regarded as the Chinese state’s aggressive and self-serving outward expansion that challenges the liberal international order. Whereas the latter is considered as Beijing’s subjection to the western-led Bretton Woods system and that it is being socialised into the liberal economic norms. The dichotomy between describing China as either a ‘revisionist’ power or ‘status quo’ supporter does not help us understand its strategic engagement in bilateral and multilateral development finance mechanisms simultaneously.
This paper shows how a nuanced study of key domestic Chinese actors’ participation in both bilateral and multilateral development finance can effectively help us understand the country’s role in the international development finance regime. More specifically, the paper specifies top political leaders, minister-level state agencies, provincial governments, policy banks, state-owned commercial banks, non-bank financial institutions, non-financial SOEs, and private companies’ respective participation in both bilateral and multilateral development finance cooperation, the challenges they face in bilateral lending, and how they pursue ‘efficiency’ and ‘strategic’ gains through engaging with the MDFIs. It argues that the domestic Chinese actors adopt a comprehensive participating approach to international development finance. They do not choose between either bilateral or multilateral approach to overseas development activities. Instead, they engage in both, the extent to which depending on their respective political and commercial interests as well as their ‘efficiency’ and ‘strategic’ needs.
