How does China challenge the power of Western donors in Africa? This question has been raised by policy makers, scholars and pundits alike ever since the Chinese presence in Africa started to grow at the turn of the 21st century. However, few attempts have been made to explore this issue in a systematic way. This paper summarises a groundbreaking contribution in this regard by exploring how the commercial loans extended by China to African countries challenges the IMF’s power. The main case study is the Democratic Republic of Congo (DRC), and the analysis draws on primary data gathered during a total of six months of qualitative field work.
The report was presented during the seminar Samhällsstyrning – nationellt och globalt.
- Chinese commercial loans do indeed challenge the IMF’s power in African countries. The loans are not rolled out as part of an attempt to challenge and altogether replace the IMF’s public debt norm. Rather, they are extended for commercial reasons, if Chinese companies and banks deem a specific commercial opportunity worthwhile.
- The IMF’s public debt norm posits that low-income countries should primarily take up concessional, low-cost loans, because reimbursement is made via the state budget and borrowing countries often have weak state revenues. In contrast, according to the Chinese public debt norm, low-income countries can take up commercial, expensive loans.
- The dissertation identifies compromises on the side of the IMF similar to that made by the organisation in the DRC, in Angola and Ghana. The IMF portrayed the renegotiated version of the Chinese loan as a low- cost, concessional loan. However, as shown by calculations in the dissertation, it remains an expensive, commercial loan.
- The dissertation argues this silent compromise was made because the political and economic importance of the Chinese loan made it impossible for the IMF to ask the DRC to downsize the Chinese loan even further. This compromise was the only way for the IMF to help the DRC move forward in its debt relief process, which was blocked by the Chinese loan.
Johanna Malm defended her PhD dissertation When Chinese development finance met the IMF’s public debt norm in DR Congo in International Development Studies at the Department of Social Sciences and Business at Roskilde University in Denmark in April 2016.