By Rebecca Ray
After providing a staggering amount of finance for overseas development projects in the wake of the global financial crisis, Chinese overseas development finance has been on a general downward trend for several years. New data shows the pandemic years of 2020 and 2021 are no exception.
The China’s Overseas Development Finance (CODF) Database, managed by the Boston University Global Development Policy Center, recorded 28 new loan commitments in 2020 and 2021 worth a combined value of $10.5 billion, the lowest in recent years.
A new policy brief shares insights on the state of China’s overseas development finance from 2008-2021 and how borrowers, sectors and loan types have changed over the years, especially compared to the World Bank.
Key Findings From the Global Development Policy Center’s Latest Research on Chinese Overseas Development Financing:
- TOTAL # OF LOAN COMMITMENTS: The CODF Database records a total of 1,099 Chinese overseas development finance commitments made to 100 countries, totaling $498 billion between 2008-2021. This level of lending (83 percent of World Bank sovereign lending during these years) places China’s development finance institutions (DFIs) among the most active DFIs in the world. Loans have been made on nearly every continent, with concentrations in Southeast Asia, Africa and South America.
- CHINA’S NEW “SMALL IS BEAUTIFUL” APPROACH: As Chinese overseas development finance has fallen in total value, so too has the average loan commitment size, both in monetary value and in the geographic footprint of financed projects. This trend supports the “small is beautiful” approach to Chinese economic engagement in recent years, which prioritizes smaller and more targeted projects.
- WHERE IS THE MONEY GOING? China’s development finance has been concentrated among its top ten borrowers — Angola, Argentina, Bangladesh, Brazil, Ecuador, Iran, Kazakhstan, Pakistan, Russia and Venezuela — which account for $296.3 billion, or 59 percent, of total loan commitments. The top three sectors for China’s development finance are extraction and pipelines, transport and power, accounting for $331 billion, or 66 percent, of total loan commitments.
Rebecca Ray is a Senior Academic Researcher at Boston University’s Global Development Policy Center
- The Boston University Global Development Policy Center: “Small is Beautiful”: A New Era in China’s Overseas Development Finance?
- The China-Global South Project: Diversifying Development: Why Countries Are Seeking Development Finance from Both China and the World Bank by Rebecca Ray