Chinese Official Lending and Bilateral Political Alignment
The Case of Africa “Lend your Money, Lose your Friend?”
Clément Durif, Junior Research Fellow, Asia Centre
This study examines the relationship between debt and political alignment when it comes to international relations. More specifically, it focuses on how the People’s Republic of China’s (PRC) rising involvement in African sovereign debt influences African countries’ voting patterns at the United Nations General Assembly (UNGA). We exploit two main datasets, collecting respectively all roll-call votes on UNGA resolutions, and Chinese public and publicly guaranteed loans (PPG) to African governments from 2000 to 2020. After constructing a yearly voting affinity score for each African country vis-à-vis China (our proxy measure for political alignment), and drawing on country-level panel data, we implement a Two-Stage Least-Squares approach using Chinese PPG debt stocks-to-GDP ratio as our instrument to correct for the endogenous nature of our initial loan variable. Over the whole sample, we observe a negative but limited effect of Chinese lending on African political support, while trade, foreign direct investment (FDI) and Chinese GDP appear to have a greater positive impact. When narrowing down the sample to the most exposed African countries in terms of debt-to-GDP ratio, we find statistically significant effects of loan terms on voting affinity – negative for interest rates and positive for maturities. These results suggest that the accumulation of Chinese loans, and particularly those contracted under commercial terms, may adversely affect bilateral relations due to their repercussions on debt sustainability. They on the contrary align with the literature supporting that trade and FDI are beneficial for international relations. Our findings provide overall a clearer insight into the PRC’s loan diplomacy’s relative failure with regards to its coalition-building purpose and, hence, into the resulting ongoing strategic shift in this area.
China’s soft power impact on UN voting against Ukraine
Alessia Amighini, Non-resident Fellow @ Bruegel and Economics prof. at UPO
We analyse the importance of a wide range of factors influencing the voting behaviour of countries in favour of Russia in the UN resolution (A/RES/ES-11/61) on March 2 2023. We include economic, political and military ties with Russia and China (as a major supporter of Russia) in a multivariate regression analysis. Our results show Russia’s hard power at work: the probability of voting in favour of Russia was significantly higher for countries receiving Russian aid, Russian foreign direct investment, arms imports and defence cooperation from Russia. At the same time, China’s soft power also
exerted considerable influence on voting patterns, to the extent that Belt and Road Initiative participation and Global South significantly increased the probability of voting in favour of Russia.
