Global Humanities and Social Sciences

China’s Alternative Borrowing to African Countries: A Counterbalance to Traditional Development Financing

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Abstract

In the past thirty years, the Chinese government has significantly increased development financing to countries in the Global South—Africa, parts of Asia, and Latin America, where 1.1 billion people of the world's poorest, accounting for 18% of the world’s population by tenfold in the form of aid assistance, loans, and grants. Countries such as Kenya, Ethiopia, Uganda, Tanzania, Eritrea, Liberia, Ghana, and those in Southern Africa, including South Africa, Botswana, and Namibia, are practical examples. This has sparked interest in understanding the impact of China's development models and financial aid. Numerous studies have been conducted to examine the impact of Chinese development policies on patterns and outcomes in recipient countries.

This paper critically reviews the existing literature, focusing on how China has become an alternative to official development financing provided by the Bretton Woods institutions—the International Monetary Fund (IMF) and the World Bank (WB)—counterbalancing United States-led Western alternatives for development financing in poor countries. Although there are claims and counterclaims that Chinese funding is less politically motivated than Western development assistance, empirical studies suggest that the One China Policy plays a significant role in explaining Chinese development financing.

There are also claims that Chinese finance has been found to disregard or promote efforts of “good governance, human rights, and liberal values” and has, over the years, been associated with political, “geopolitical alignment, coercion, and environmental degradation” in some recipient countries, as it does not enforce governance reform conditions as its official financing prerequisites. Despite these concerns, it is vital to consider the positive effects of Chinese development financing on critical public infrastructure, such as air and seaports, roads and bridges, education and health facilities, and supply chain networks, as well as massive economic growth among poor countries in the global South over the last three decades. This paper presents China not only as a normative power but also as a beacon of hope, an alternative for global financing development, and a new path for the future.

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