Belt and Road Stop: A Two-Level Game Analysis of the Political Economy of Chinese Sovereign lending in sub-Saharan Africa
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2024-07-01
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en
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China’s growing political, economic, and societal influence on the African continent emerged as a vastly studied and conflictual subject of scholarly research. While especially, since the early 2000s, China’s seemingly persistently increasing economic dominance on the continent is intensively covered by researchers, after decades of Chinese sovereign lending to the region, at unprecedented levels, there is a lack of empirical grounded explanations for the historically low numbers of Chinese sovereign loans to Africa since 2019. With the help of a unique dataset, covering the period between 2013 and 2022, and a two-level game approach, the paper seeks to investigate why Chinese sovereign loans to sub-Saharan Africa drastically decreased from 2019 onwards. The paper suggests that political-economic factors, such as rising concerns of debt unsustainability resulted in diminishing win-sets, both for the Chinese supply and sub-Saharan African demand side for sovereign loans, which in turn diminished the space of mutual gains, and hence is expected to be a crucial explanatory factor for the drastic decrease in the number Chinese sovereign loans to sub-Saharan Africa since 2019. Moreover, the paper's empirical findings suggest that the issue of sub-Saharan African growing debt stock indeed negatively affects Chinese African financial cooperation. However, conversely, to the paper’s expectations, debt sustainability seems not to be a significant predictor for explaining the notable decrease in Chinese sovereign loans to sub-Saharan Africa since 2019. Moreover, the findings of the paper indicate that commonly used classifications of critical debt such as the IMF’s 55 percent threshold strongly underestimate the sustainability capabilities of Chinese-African financial cooperation.
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Faculteit der Managementwetenschappen