Thursday, March 2, 2023

Chinese Lending to Sri Lanka: A Factual cum “Reality” Check

Note: This guest blog post by Dr Muttukrishna Sarvananthan is a response to CARI briefing paper 08/2022: EVOLUTION OF CHINESE LENDING TO SRI LANKA SINCE THE MID-2000S: SEPARATING MYTH FROM REALITY by Umesh Moramudali and Thilina Panduwawala 

The full version of this rejoinder can be accessed at the following: 


The purpose of this response is, firstly, to pinpoint the factual errors (both quantitative and qualitative) in Moramudali and Panduwawala (2022), and, secondly, to contest the “reality” the authors are attempting to illustrate with such studious endeavour.    

However, more than the factual errors (both quantitative and qualitative), our main concern here is the interpretation of the facts and the conclusions drawn therefrom by Moramudali and Panduwawala (2022). Moreover, we will be pointing out certain instances where Moramudali and Panduwawala (2022) contradict themselves by demolishing and also affirming the so-called “myths” (“hidden debt”, for instance) in different places in the same Briefing Paper. The peer reviewer/s (if there were any) seem to have not noted these contradictions or anomalies.

A Factual Check

Moramudali and Panduwawala (2022) estimate that the total outstanding Chinese loans to Sri Lanka at the end of 2021 were US$ 7.4 billion out of a total “US$ 37.6 billion” of the external public debt of Sri Lanka (excluding the CBSL debt)  as at the end of 2021. They estimate the Chinese loans to be 20% of the total external public debt of Sri Lanka at the end of 2021.

However, according to our estimate based on the Quarterly Debt Bulletin of the Ministry of Finance , the total outstanding publicly-owned foreign currency liabilities of Sri Lanka were almost US$ 46 billion as of September 30, 2022.  If we assume that Moramudali and Panduwawala’s estimate of the outstanding Chinese loans to Sri Lanka (US$ 7.4 b) is correct, then the share of China in Sri Lanka’s total outstanding external liabilities was 16% as of September 30, 2022, according to our estimate.

Due to brevity of space, the details of factual errors (including the data tables) are not included in this blog post. Please read the full rejoinder for the details.

A Reality Check

Our main concern in the Briefing Paper by Moramudali and Panduwawala (2022) is about the erroneous interpretation/s of the data and the conclusion/s drawn. 

“We found no deliberately ‘hidden debt’ in China’s lending to Sri Lanka’s public sector …” 

It does not really matter whether China accounts for 20% of the total outstanding external public debt of Sri Lanka, or 16% of the total outstanding external liabilities of Sri Lanka as we have estimated, or any other percentage. The foregoing claim is of interest to us.

The real issue for us is whether the Chinese lending to Sri Lanka during 2007-2022 is predatory or not. It is on this issue that we contest the conclusions arrived at by Moramudali and Panduwawala that classifying the leasing of the Hambantota International Port (built at a total cost of US4 1.3 billion ) to a Chinese state-owned company as an “asset seizure” or “debt-for-equity swap” is a “myth” (see the following quoted passage). Moramudali and Panduwawala’s attempt to “firmly separate myth from reality”  is what is contentious to this author. 

“……. the 99-year lease of the (Hambantota) port in 2017 was a measure to address severe balance of payments issues, ...... The lease proceeds helped improve foreign currency reserves and there was no debt-to-equity swap nor an asset seizure, contrary to popular narrative.”  

We agree with Moramudali and Panduwawala (2022) that, in a strictly legal sense the leasing of the Hambantota International Port (HIP) to a Chinese state-owned company in 2017 was not an “asset seizure” nor a “debt-to-equity swap’. It is not an asset seizure because the port was never made collateral for the loans from the China Exim Bank (China Export-Import Bank, aka ChEXIM) to build and subsequently expand the port. Asset seizure occurs only when the borrower had mortgaged the particular (immovable) asset as collateral for the loan/s obtained to build or expand.  Usually, there is no collateral involved in any borrowings by a sovereign country. 

Besides, it is not a “debt-to-equity swap” either, because the money received for granting 85% of the equity stake to the China Harbour Group (CHG - a state-owned company) in 2017 was not utilised to repay the loans borrowed for the purpose of building and expansion of the port. As Moramudali and Panduwawala (2022: 2, & 16) have revealed, the money received for the lease was utilised as “…. a measure to address severe balance of payments issues….”, which we assume to have been used to repay one or more of the then maturing International Sovereign Bonds (ISBs). 

Moramudali and Panduwawala (2022: 9) further claim that all the loans obtained from China for the building and expansion of the Hambantota International Port (HIP) are still being serviced by the Treasury of Sri Lanka, having taken over the loans from the balance sheet of the Sri Lanka Ports Authority (SLPA – a state-owned enterprise) in 2017. Between 2013-2017, HIP loans were included in the balance sheet of the SLPA as a NON-GUARANTEED foreign loan of the SLPA.  This indeed was a classic example of a “hidden debt” , which Moramudali and Panduwawala (2002: 2) painstakingly deny. It does not really matter whether it was hidden by the Government of Sri Lanka (GoSL) or the lender (Chinese financial institution). Both have an international obligation to be transparent.

Whilst Moramudali and Panduwawala (2002: 17) confess that “The Auditor General noted that the outstanding balance of four ChEXIM loans for Hambantota port construction were not recorded in the government’s outstanding debt stock. While debt repayments were made on time by the Treasury and tracked by the ERD, outstanding loan amounts were not recorded by the SLPA or the Treasury in annual balance sheets.”, how could they assert that, “We found no deliberately ‘hidden debt’ in China’s lending to Sri Lanka’s public sector.”  

Further, whilst Moramudali and Panduwawala (2022: 2) at the outset deny there was any “hidden debt” in Chinese lending, later on, they also confess that “………there was indeed a portion of Chinese lending to Sri Lanka’s public sector that is apparently ‘hidden’ due to the complexities of debt classification and inconsistency of reporting standards across various public institutions and reports, especially with regards to debt recorded under SOEs. But in reality, they are not ‘hidden’ because at least some public institutions were reporting on these loans in publicly available reports and in data easily obtainable via RTI requests.”  

Obtaining information through an application in terms of the RTI Act is not what a transparent borrower and lender should impose on the citizens or any other interested party. Proactive disclosure of the information is the norm among the Development Assistance Committee (DAC) countries of the OECD.

To this author, the utilisation of the proceeds of the leasing of the HIP to augment the balance-of-payments or for the repayment of a maturing ISB/s is a dubious accounting practice of the Government of Sri Lanka (GoSL) and a gross violation of the International Public Sector Accounting Standards (IPSAS, 2002) of an accountable democratic state. 

This is where the Chinese lender (EXIM Bank of China) has also erred. If it is indeed a responsible and accountable state-owned lender of the world’s second-largest economy, the EXIM Bank of China should have insisted that the money paid by the China Harbour Group (CHG) to the Government of Sri Lanka for the acquisition of 85% equity stake in the HIP should be channelled to repay the loans obtained from the EXIM Bank of China to build and subsequently expand the HIP. We sincerely believe that, if the lender for the HIP was a state-owned bank from a DAC member bilateral donor, the foregoing dubious transaction by the GoSL would not have been allowed. Therefore, China cannot absolve itself from culpability in the foregoing dubious transaction and accounting practice of the GoSL. 

It is precisely the accounting malpractice of the GoSL and the collusion of China in this dubious transaction that had led to accusations of “asset seizure” and “debt-to-equity swap”. This author has come across similar unethical (if not illegal) practices in the Chinese lending to Pakistan and to some African countries as well.  

Secondly, the 6.3% interest charged on the first agreement dated October 30, 2007, for a loan of US$ 307 million, and 6.5% interest charged on the second agreement dated August 06, 2009, for a loan of US$ 65 million for the Hambantota International Port (HIP) by the Exim Bank of China were exorbitant (but may not be predatory) for an infrastructure project of the scale of the HIP. Moramudali and Panduwawala (2002: 6) have themselves admitted that the aforementioned interest rate/s were very high given that the effective LIBOR (London Inter-Bank Offered Rate – an average of interest rates of leading banks in London) rate was just 2% in 2009. However, we are aware that the first-ever International Sovereign Bond (ISB) floated by Sri Lanka in July 2007 incurred an 8.25% annual interest rate.      

Quasi Predatory lending by China

We characterise the Chinese lending to Sri Lanka as ‘quasi predatory’. The rationale for this characterisation is as follows.

What is predatory lending?

Predatory lending in financial parlance could be defined as the imposition of unfair, arbitrary, and even abusive terms and conditions on the borrower by the lender.  Both the borrower and lender can be individuals, institutions, or nation-states. Such severe conditions can be aggressive sales/lobbying tactics, very high-interest rates (usually 3-digit interest rates), overcharging for administrative cost/s, non-disclosure of risk factors by the lender, failure to carry out due diligence with regard to the technical feasibility and/or financial viability of a particular project (such as the Hambantota International Port or the Colombo Lotus Tower (1,150 feet or 350 metres) – the tallest communications tower in South Asia), very high collateral requirement, a very stringent penalty in the event of default, etc, or a combination of the foregoing. 

Why do we term the Chinese lending to Sri Lanka quasi-predatory?

Whilst admitting that Chinese lenders (two major ones are the China EXIM Bank and China Development Bank) cannot be accused of charging very high interest rates (interest rates of Chinese lending have been always in single digit and lower than the interest rates charged by private international capital market lenders), excessive administration costs, or imposing very high penalty in the event of default, etc, with regard to its lending to Sri Lanka, to the best of our knowledge, China could be legitimately accused of failing to carry out due diligence with regard to the financial viability/commercial potential of most of the projects funded by it in Sri Lanka (including the Hambantota International Port (HIP), Mattala International Airport, Colombo Lotus Tower, etc) and Sri Lanka’s capacity to repay the corresponding borrowings (by way of an in-depth review of the assets and liabilities of the Sri Lanka Ports Authority, the original borrower for the HIP as noted by Moramudali and Panduwawala (2022), for example), and resorting to aggressive marketing/lobbying tactics amongst Sri Lankan political leaderships and bureaucrats. 

In addition to the aforesaid failure of the Chinese lenders to take due diligence in the cases of funding prestige mega infrastructure projects (for example, HIP), Chinese state-owned infrastructure development companies operating in Sri Lanka for nearly 20 years now (such as China Harbour Engineering Corporation and China Harbour Group, for example) are alleged to be involved in aggressive lobbying for projects (even submitting unsolicited project proposals with suggestions for Chinese funding mechanisms) among the political leadership/s in power and senior bureaucrats. The foregoing are naturally predatory lending practices in financial parlance. 

Additionally, Chinese state-owned companies could also be potentially involved in bribing politicians and/or bureaucrats in their host countries, which is termed “corrosive capital”. We would like to highlight three such concrete examples of abrasive/aggressive project grabbing by Chinese companies in Sri Lanka in the last few years (an elevated highway connecting the Colombo Port City and Thalawathugoda, Eastern Container Terminal at the Colombo International Port, and the elevated highway connecting the new Kelaniya bridge with Athurugiriya), and a concrete example of secrecy demanded by the Chinese Embassy in Sri Lanka with regard to the purchase of Sinovac COVID-19 vaccines by the Ministry of Health. Due to brevity of space we have deleted the details from this blog post, which can be read in the full rejoinder.

What the aforementioned concrete pieces of evidence point to is that, whilst Chinese lending may not be termed predatory lending (because of the absence of very high-interest rates on their lending and there is hardly any evidence of overcharging in terms of administrative cost/s, etc), Chinese lending could be reasonably characterised as quasi-predatory lending because of their lack of due diligence on project funding, and aggressive lobbying tactics with Sri Lankan politicians and bureaucrats. 


Therefore, we would argue that Moramudali and Panduwawala’s characterisation that the accusations of asset seizure or a debt-for-equity swap by Chinese lenders with regard to the acquisition of an 85% equity stake on the HIP in 2017 are a “myth” appears to be an attempt to camouflage reality. It is precisely the aforementioned quasi-predatory practices by the Chinese state-owned companies and Chinese official lenders that elicit such accusations by investigative journalists and other concerned people, including some international development partners.

In sum, while we may characterise the borrowings by Sri Lanka through the floating of International Sovereign Bonds (ISBs) being similar to borrowing from individual money lenders in Sri Lanka, we may characterise the borrowings from China as being similar to the borrowings from microfinance institutions in Sri Lanka. The former could be characterised as predatory and the latter quasi-predatory.

Muttukrishna Sarvananthan is the Founder cum Principal Researcher of the Point Pedro Institute of Development (PPID), Point Pedro, Northern Province, Sri Lanka, established in 2004. The author is a Development Economist by profession. He has undertaken fiscal and monetary transparency reviews in Sri Lanka for Oxford Analytica, Oxford, UK, from 2003 to 2006. Email:   


 1. Accessed on February 05, 2023.
 2. Moramudali and Panduwawala, 2022: 2, 3, & 5.
 3. Accessed on February 05, 2023.
 4. Moramudali and Panduwawala, 2022: 2.
 5. Moramudali and Panduwawala, 2022: 8.
 6. Moramudali and Panduwawala, 2022: 4.
 7. Moramudali and Panduwawala, 2022: 2, 14, & 16.
 8. Moramudali and Panduwawala, 2022: 16-17.
 9. Moramudali and Panduwawala, 2022: 9.
 10. See, Polackova, 1999.  Accessed on February 05, 2023.
 11. Moramudali and Panduwawala, 2022: 2. 
 12. Moramudali and Panduwawala, 2022: 33. 
 13. This is a research in progress by this author.
 14.; 15. Accessed on February 08, 2023.

Friday, December 10, 2021

Montenegro, China, and the Media: A Highway to Disinformation?

"Perast - Montenegro" by MILACHICH is licensed under CC BY-ND 2.0

How do Chinese banks really lend in risky countries overseas? Although no documented cases have come to light in Africa (or elsewhere), rumors that Chinese loan contracts allow China to seize land or unrelated strategic assets, like ports, as collateral for sovereign (i.e. government) loans are rife in African media and civil society.

As part of our ongoing CARI research project on Chinese lending, we published this week a detailed investigation by our European colleagues Laure Deron, Thierry Pairault, and Paola Pasquali into similar media rumors surrounding a Chinese-financed highway in the small, mountainous Eastern European nation of Montenegro. 

The Chinese loan contract for this highway has been available online.* These scholars’ detailed examination of this case sheds light on just how reporters’ lack of understanding of common legal terms, in a context where the “China threat” narrative boosts viewership, can lead to rumors like these: 

ON JUNE 21 2021, THE FRENCH PUBLIC TELEVISION channel France 2 evening news aired a report in which it was stated that Montenegro, a heavily indebted nation, was at risk of “having to cede some of its land to China” as a result of its inability to pay back a loan for the construction of a highway. According to reporters, Montenegro’s Port of Bar could be annexed by China “completely legally”, thanks to an “extraordinary contract” that had, “already [been] implemented by the Chinese in Sri Lanka or in Djibouti”. As the report further explained, Montenegro had accepted conditions “never seen before in Europe (…)”: under the contract, should it fail to pay back the loan to the Chinese bank, Montenegro would need to concede lands”. The Balkan State, allegedly, had even requested that the European Union “help pay back the Chinese, lest the latter use its territory as a repayment means”. 

Is this the case? Read on


*the English version starts on p. 50.

Wednesday, December 1, 2021

BBC Misrepresents my Views on "Debt Trap Diplomacy"

The BBC misrepresented my views this morning, and I admit I'm stunned. I'm a big fan of the BBC. Living in Taiwan and Hong Kong, in the 1970s; doing fieldwork across Africa in the 1980s, I used to listen to the BBC World Service on my shortwave radio and I trusted them to present nuanced and balanced analysis.

Last night I had a call from London. I picked up to find a BBC reporter who wanted my views on Chinese "debt trap diplomacy." Apparently the head of Britain's intelligence service, Richard Moore, had given the BBC an interview in which he said that the Chinese have deliberately used debt as leverage to acquire strategic assets. We spoke for awhile on background and I outlined why this idea had little basis in fact, drawing on my extensive research with Meg Rithmire about the Hambantota Port in Sri Lanka and other cases, and that of other researchers. I gave examples from Montenegro, Kenya, Zambia, and other places where these fears have been trumpeted in the media, but without evidence to support them. He said that another reporter would call me in an hour and record an interview.

An hour later, a woman called and simply asked me to speak for a minute about this idea: a quick explanation of what debt trap diplomacy is believed to be, an example from Sri Lanka or elsewhere, and why the evidence doesn't support the story. I briefly explained all of this, she recorded it, and we hung up. 

This morning I've been getting messages from British colleagues who've been doing research on Chinese investment overseas and who know my research. One said that the recording "seemed to have been edited to make it sound like you were possibly supporting the debt diplomacy narrative, which of course misrepresents your nuanced commentary on this available elsewhere."  

I quickly listened to the BBC recording (my clip is about 1 hr 50 minutes into the program) and was horrified to find that the only clip they took from the interview was my explanation of the "idea" of debt trap diplomacy and the "conventional wisdom" about the case in Sri Lanka. They completely discarded all the evidence I presented after that about why that conventional wisdom was not correct. Then, they brought in a former adviser to the Trump administration whom he interviewed at some length about the China threat, but again providing no evidence about "debt trap diplomacy" aside from this: "we've charted it globally and it's fairly widespread". She also repeated the (oft-debunked) claim that the Chinese bring in all their own workers...

The reporter leading the story clearly had his mind made up already about the point of view he wanted to present. My little clip was prefaced by a question I was never asked: "What can we do to combat this?" he said, rather than a question that would have made room for a more balanced discussion of this claim. It all reminds me, rather depressingly, about the widespread belief that the Chinese were acquiring large amounts of land in Africa to grow food to send back to China. I spent three years doing field research on that myth and wrote an Oxford University Press book debunking it. No one makes that claim anymore--not due to me, I think, but simply because a more interesting "threat narrative" has now gripped the media's mind. Sigh. 

Update December 2: I reached out to the BBC reporter who originally contacted me, expressed my dismay, and sent him a link to this blog post. He responded right away, with apologies, explaining that my inappropriate clip was an editing decision by an inexperienced producer in a tight production situation. I can understand human error and I'm giving them the benefit of the doubt. 

Tuesday, September 28, 2021

Zambia's Chinese Debt in the Pandemic Era

Figure 1: Chinese loans, copper prices, and Zambian elections


In August 2021 a new president, Hakainde Hichilema, took office in Zambia, facing a debt burden that had never been fully transparent to Zambia’s public and the world. 

In two CARI papers released today, we shed light on Zambia's Chinese debt dilemmas. 

In CARI Briefing Paper 05/2021, "Zambia's Chinese Debt in the Pandemic Era," Yinxuan Wang and I use CARI data and research on loan disbursements and repayments to estimate Zambia’s outstanding external public debt to all Chinese financiers, official and commercial: approximately US$6.6 billion. This figure is more than double that of the most commonly cited figure for Chinese debt in Zambia (US$3 billion). 

  • 18 major and minor Chinese financiers have provided external loans to Zambia and its state-owned enterprises since 2000, the highest number of any country in our data
  • Loan commitments by Chinese financiers between 2000 and 2020 totaled US$10.3 billion, with 63 percent (US$6.47 billion) committed just since 2015 (Figure 1)
  • Based on project implementation status, we estimate that US$7.8 billion was disbursed by August 2021. 
  • Contracted but undisbursed Chinese loans as of August 2021 amounted to US$2.5 billion, around 13 percent of 2020 GDP.
  • We calculate that Zambia and its state-owned enterprises have repaid at least US$1.2 billion to Chinese lenders since 2000. 

Our estimate should not be interpreted as evidence that Zambia’s total public external and publicly-guaranteed debt as of December 2020 was significantly higher than Zambia has previously reported ($14.3 billion). These Chinese debt figures can largely be accounted for in aggregate figures published by Zambia’s Ministry of Finance's Annual Economic Reports and the new "Government Debt Portfolio Review."  For example, Chinese creditors are likely buried in the "other creditors" category of US$4.0 billion in external debt in the end-2020 central government debt report and in the US$527 million of government guaranteed debt owed by ZESCO.  It does mean that the Lungu government was not transparent about the heavy weight of Chinese financiers among its many external creditors. 

As there are many rumors about Chinese “debt traps,” it is important to emphasize that Zambia is an outlier when it comes to the weight of Chinese loans (Figure 3). We estimate that Zambia’s loan commitments to all Chinese creditors at the end of 2019 was close to 43 percent of 2019’s gross national income (GNI). The average for Africa was 10 percent (all data refers to the African continent). Figure 2, based on World Bank data for GNI and external PPG debt, and CARI data on Chinese loan commitments shows how Zambia, Djibouti, Angola, and the Republic of Congo stand out.

Figure 2: Chinese loan commitments as % of 2019 GNI vs External Debt Stock as % of GNI

In a second paper, CARI Working Paper No. 51, "How China and Zambia Co-Created a Debt 'Tragedy of the Commons'," I analyze how Chinese creditors, contractors, and Zambian stakeholders failed to take steps to make Zambia's borrowing sustainable. Curious why Zambia was a clear outlier (Figure 2), I explored the system for project development and loan approval in Zambia and China. 

My argument holds that principle-agent problems, including information asymmetries, the tragedy of the commons, and moral hazard, explain the Zambian case. In particular, Zambia has the largest number (18) of separate Chinese lenders of all the African countries in our data, and the second largest number of separate Chinese contractors (29). It also is the African country with the largest amount of Chinese interest-free loan debt write-offs, and the country with the highest number of separate debt cancellations.

Figure 3: Zambia: Chinese contractors' annual revenues
and Chinese lenders' annual loan commitments

This large number of stakeholders competing for business in the "pond" of public resources created Zambia's unsustainable debt. Figure 3 shows the relationship between contract revenues in Zambia and loans. A dip in contract revenues after 2013 was followed by significant new lending in 2016 and 2017, and contract revenues rose again.

Given the complicated situation with at least 18 Chinese lenders having provided external loan funding to the Zambian government and its state-owned firms, reaching consensus on burden-sharing in the Common Framework is likely to prove exceptionally difficult. 

Tuesday, July 6, 2021

The Road to Who Knows Where: What one highway project in Cameroon can tell us about the complexities of Chinese lending in Africa

This post is by former CARI Research Assistant Alex Hardin and CARI Director Deborah Brautigam. Alex Hardin is now an M&E Associate at Winrock International.

Photo credit: The Taxi Photographer via Wikimedia Commons
Narratives of China’s lending to Africa are often oversimplified, focusing on the Belt and Road initiative writ large, and leveling accusations of “debt-trap diplomacy.” Yet, a peek beneath the surface reveals an increasingly complex web of Chinese financiers and contractors, African government planning and finance bodies, and numerous other infrastructure agencies. Each project reveals a story that both complicates the reductively simple narrative and helps to paint a clearer portrait of the process by which these projects are realized.

One such story is that of the first phase of a Cameroonian highway construction effort intended to link the country’s political capital, Yaoundé, to its economic center, Douala, by way of another major metropolitan hub in Edéa. To this end, in the first phase, as described by a project overview from the Ministry of Economy, Planning, and Regional Development (MINEPAT), Cameroon set out to construct a road between Yaoundé and Bot-Makak, a town approximately one third of the way toward the ultimate endpoint in Douala. To finance construction works, the Government of Cameroon signed a loan with Eximbank China in the form of a preferential export buyer’s credit (PEBC) worth US$482,800,000 on March 8, 2012. China First Highway Engineering Co., Ltd. (CFHEC) was selected to build the project. From this point on, progress would be anything but straightforward.

In December 2013, China Eximbank made its first disbursement of US$96,560,000. Yet the start of construction was unexpectedly delayed by the  Cameroonian authorities, who intervened at this late date to modify the project specifications by raising the speed limit from 100 km/hour to 110 km/hour as well as increasing the number of planned lanes. This, in turn, led the contractor to warn that the budgeted project cost would allow for construction of only 47 of the contracted 68 kilometers, if built under the new stipulations. 

On March 27, 2014, the Chinese Embassy’s Economic and Commercial Office posted a commentary on the project on its website (in Chinese). The commentary explained that the highway had been originally designed to meet Chinese standards for highway construction. The decision by the Cameroonian authorities would bring the road in line with French standards, which are closer to Cameroonian requirements. The Embassy further remarked that China hoped to see its counterparts in Cameroon (i.e. the Minister of Public Works) provide feedback on the final technical standards of the project as soon as possible, hinting at a growing frustration at the sudden adoption of specifications that differed from those originally negotiated. Adding to the air of exasperation, the author underscored a desire that Cameroon identify its “sole interlocutor” for the project, which it deemed necessary “because several ministries and commissions of the Cameroonian government are involved in the project at the same time”. The author assured readers that Cameroon had promised an official start date before April 15, 2014, despite lingering issues over land acquisition and compensation, a responsibility of the Cameroon side. 

That optimism was misplaced. Work on the project finally began sometime in the first quarter of 2015 and was scheduled for completion in 2018. However, progress was continually beset by obstacles. Chief among these were delays in compensating residents whose property fell along the proposed route. Cameroon’s defaults and restructuring of Chinese loans in 2019 also affected the project. 

After making six disbursements amounting to US$202,675,284 up through October 29, 2019, the Chinese bank had stopped disbursements. “Yaoundé does not present any repayment guarantee,” a well-placed source said. China Eximbank proposed a new repayment guarantee mechanism, of an unclear nature. Yaoundé had not yet signed it as of October 2020. For all these setbacks, however, work on the 60km section of road was reported to have reached a “physical execution rate” of 91% by the start of 2021. 

The Chinese contractor is bearing the cost of the delay—each day of delay is likely to come at very high cost, as the contractor must pay staff, workers, and perhaps service the company’s own loans. The question now is who will blink first: will the government provide an acceptable guarantee, or will the contractor finish the project, essentially providing its own loan to Cameroon? 

In the larger context of China-Africa relations, this project serves to demonstrate that, contrary to the image of a one-sided asymmetry of power dominated by a strong China, African borrowers can exercise a certain degree of agency. Within the constraints of an established relationship involving a Chinese state lender and a Chinese contractor, the borrowing country was able to reconfigure project plans to suit its own ends, seemingly without first consulting its Chinese partners. 

This is not to say that doing so was necessarily the most prudent decision—and the repeated delays and missing payments indicate that local Cameroonians are likely to bear some of the negative consequences. For example, the last steps for finishing roads include a final layer of black top that seals the road, and the construction of culverts that channel water away from the road. Will the contractor complete these steps without being paid? Or will the road start to wash away in the rainy season? 

Nevertheless, the story highlights the fact that examining individual projects reveals the complexity and unpredictability of the relationships that develop between African countries and Chinese actors.

Note: At the time of publication, the Cameroonian government website where the authors sourced a large portion of the data necessary for this analysis ( has ceased to be accessible online. We hope that it will become accessible again soon.

Thursday, June 10, 2021

Evaluating the Impact of China-Financed Power Projects on Electricity Access

This guest blogpost is by SAIS PhD student Keyi Tang 

Photo credit: ZSM
In the last decade, China has overtaken the World Bank and the African Development Bank to become the biggest financier of infrastructure projects in sub-Saharan Africa. The CARI loan database now housed at Boston University provides extensive data on these projects. Yet little research has been done on how Chinese loans affect the social welfare of African countries. Africa is the region with the highest percent of people who do not have access to electricity. Electric power is the second largest sub-sector in Chinese lending, making up 20 percent of all loans (transport makes up 54 percent). 

Has Chinese lending improved the access to electricity for Africans? This blogpost proposes a research idea that attempts to answer this question using the SAIS-CARI China-Africa Loan Data and other databases. We hope other researchers will take up this challenge.

Research period: 2010-2019

Although SAIS-CARI documents China-financed energy projects in Africa since 2000, the bulk of the loan projects are recorded as being signed post-2010. A focus on the 2010-2019 period could allow a higher number of samples, which translates to more observable events. 

Unit of analysis:

Because the SAIS-CARI data is at the country level, the easiest way to answer the question is to look at the impacts of China-financed energy projects in different African countries at an aggregate level. Researchers can also use the subnational unit of analysis by searching the subnational location of these projects through Google Map.






Dependent Variable

Proportion of population with access to electricity

International Energy Agency

Access to electricity by country and year, 2000-2019

Main Independent Variable

China-financed energy projects

SAIS-CARI China-Africa Loan Database

China’s loan to Africa, by country, year, and sector, 2000-2019

Control Variables

OECD countries’ bilateral finance to African countries’ energy projects

OECD Development Finance Data

By recipient country, donor, year, and sector, 2010-2019

Spatial distribution of population and population density


Other socio-economic and geographical indicators that might influence access to electricity through channels other than investment on energy infrastructure.


Armed conflicts location and event data

ACLED Database

Nighttime lights


GDP per capita, PPP, by country and year

The World Bank


Mines in African district

Data in Space project


International commodity price by year

The IMF Primary Commodity Prices


Empirical strategy:

The following econometric methods are generally applied to evaluate the impact of large-scale infrastructure. Researchers can check the literature below.

a. Ordinary least square (OLS):  Humphrey & Michaelowa (2019)
b. Difference-in-differences: Martorano et al. (2020), Tang & Shen (2020)
c. Instrumental variables: Duflo & Pande (2007)

If you do undertake this research, send us a copy at!

Helpful References:

Duflo, Esther and Rohini Pande. (2007). Dams. The Quarterly Journal of Economics, Volume 122, Issue 2, Pages 601–646.

Humphrey, Chris and Katharina Michaelowa. (2019). China in Africa: Competition for traditional development finance institutions? World Development, Volume 120, Pages 15-28.

Martorano, B., Metzger, L., & Sanfilippo, M. (2020). Chinese development assistance and household welfare in Sub-Saharan Africa. World Development, 129, 104909.

Tang, Keyi & Yingjiao Shen. (2020). Do China-financed dams in Sub-Saharan Africa improve the region's social welfare? A case study of the impacts of Ghana's Bui Dam. Energy Policy, Volume 136, 111062.

Thursday, May 13, 2021

Don’t miss our CARI/Washington Post Monkey Cage collaboration series

From February to April 2021, the Washington Post’s Monkey Cage and the China Africa Research Initiative brought you a series exploring a variety of China-Africa issues. Almost all of these eleven pieces were written by our 2019 writing workshop participants and/or CARI staff. We have compiled below short teasers from each article. To read more, click on the hyperlinked title. 

  • U.S. policymakers often criticize Chinese investment in Africa. The research tells a more complicated story,” by Yoon Jung Park and Lina Benabdallah, February 19, 2021
    • China policy is a top priority for the Biden administration, who will likely face domestic challenges on how it deals with China’s role in the world. A number of legislators in Congress have, over the past several years, tried to outdo themselves with their hard-line positions on China. Nowhere has this been clearer than in their scrutiny of Chinese activities in Africa.

  • The pandemic has worsened Africa’s debt crisis. China and other countries are stepping in,” by Deborah Brautigam, Kevin Acker, Yufan Huang, February 26, 2021
    • With the coronavirus crisis exacerbating the economic crisis in Africa’s low-income countries, economists and other experts argue that debt relief is essential. While the Trump administration and others have been skeptical about China’s willingness to offer debt relief, our research shows that these fears may be overblown.

  • Don’t believe the hype about China’s ‘vaccine diplomacy’ in Africa,” by Lina Benabdallah, March 5, 2021 
    • Commentary in U.S. and European news media and policy circles have stirred cynical concerns about China using vaccines as a soft-power move to further its political and economic interests in Africa. Academic research, however, shows that China’s humanitarian assistance to Africa, including medical aid, is nothing new. 

  • African countries are helping China go green. That may have a downside for Africans,” by Meredith DeBoom, March 12, 2021
    • The details of China’s new 5-year plan, released earlier this year, suggest China has put off the difficult steps necessary to become carbon neutral by 2060. How will Beijing pursue this goal — and at what cost? China’s plans for more nuclear power plants could mean that its reliance on Namibian uranium may transfer on to Namibians the price to pay for cleaner energy in China.

  • Will Chinese funding help strengthen Africa’s climate change response? It’s complicated,” by Michael Addaney, March 19, 2021 
    • Many African governments see projects initiated under China’s massive Belt and Road Initiative as a way to help build much-needed infrastructure and help 46 participating African countries industrialize, strengthening their ability to cope with the effects of climate change. Addaney’s research, however, suggests that other factors matter as well.

  • Chinese firms — and African labor — are building Africa’s infrastructure,” by Frangton Chiyemura, April 2, 2021 
    • The proliferation of Chinese enterprises involved in Africa has attracted a great deal of attention from academics, policymakers and other observers in recent years. Of particular concern to many are China’s employment practices for large infrastructure projects on the continent. Chiyemura’s research shows that Chinese companies hire a large number of local employees. 

  • Chinese companies have different ways of managing African employees,” by Ding Fei, April 9, 2021 
    • When local Africans work for Chinese companies, the stereotype suggests, their employment is precarious. But Chinese companies do not manage employees in Africa in any universal way: their diverse backgrounds and investment in different industrial sectors influence their management practices.

  • Huawei is trying to avoid U.S. sanctions. That may change the U.S.-China tech rivalry in Africa,” by Henry Tugendhat, April 30, 2021 
    • A battle is unfolding between U.S. and Chinese tech firms over who will control what millions of people in Africa can see, hear, read and say. The launch of Harmony, Huawei’s mobile phone operating system, represents the first major Chinese foray into the world of operating systems that two U.S. companies, Apple and Google, have dominated to date.

Wednesday, February 24, 2021

In Memoriam: Professor Ian Taylor

African Studies, International Relations, and our small world of China-Africa researchers, lost one of its towering figures on February 22. Professor Ian Taylor died at the age of 52, after a short and brave battle against cancer. 

Ian was at the peak of an astounding career: the author or editor of 12 books, with over 80 refereed journal articles in his vita. He leaves behind his wife Jo, two children, Archie and Blythe, a brother and other family members and colleagues. He was very well-loved. 

For those who were fortunate to know him, Ian was literally larger than life:  tall, handsome, and kind, a generous mentor who taught a generation of students at St. Andrews University. He had a wry humor, and his energy was meteoric. And now it turns out that his life, too, was like a shooting star that explodes in a burst of color, light and energy and then is over, much too soon.

I first met Ian through his work. In the 1980s and 1990s, Philip Snow (who wrote a fantastic book The Star Raft in 1989) and I seemed to be the only people interested in the obscure topic of China and Africa. I had published an article in 1994 in the Journal of Commonwealth and Comparative Politics on China's export of development ideas through its foreign aid to Africa, an article which quickly fell into obscurity. And then, out of the blue, I had a letter from the JCCP editors asking me to peer review a paper they'd received that was also about China and Africa. This became "The 'Captive States' of Southern Africa and China: The PRC and Botswana, Lesotho and Swaziland,' Ian's first refereed journal article. 

Ian started his China journey in Hong Kong, where he studied Mandarin at the University of Hong Kong, earning an MPhil there in the mid-1990s. Our paths crossed increasingly often after that initial paper. Ian was always up for a long discussion about African development, or China's role on the continent. Our encounters often highlighted his zest for life outside the academy. Once, for example, Ian and I were both at a China-Africa conference near Charlottesville, Virginia. Afterwards, instead of heading directly to the airport, he rented a car and spent a couple of days driving and hiking in the Shenandoah mountains, exploring Virginia. In April 2010, he invited me to a conference at St Andrews. After my talk, he brought me home, where I met Jo, Archie and Blythe. We then spent the rest of that sunny Saturday on a memorable mini-tour of the coast of Scotland, visiting the church where he was an elder, walking in the villages along the coast. In 2015, Ian joined our new CARI team as a research affiliate, helping us launch our ESRC China-Africa research project at an event in Addis Ababa. 

Ian wrote to me in June last year to share the news of his grave diagnosis. In his usual full-hearted way, he was embarking on this journey with optimism, fortitude, energy, and deep appreciation for the people who were now going to be his new colleagues. "It looks like I have got a bit of a trek ahead of me," he said. "Definitely getting my taxes back through the treatment! The health people have been brilliant, and I can't complain about anything at all." 

Ian leaves behind a vast legacy, on a personal and professional level. His many honors bear witness to his vibrant mind, always questioning, seeking answers, and sharing what he learned with all of us around the world. And this will live on. 

Monday, December 14, 2020

French-language Webinar on French-Chinese Business Cooperation in Africa (Nov 10, 2020)


  • Thierry Pairault, Director Emeritus of Research, French National Centre for Scientific Research; Director, Research Center on Modern and Contemporary China, School for Advanced Studies in the Social Sciences (EHESS)
  • Jérémy Rubel, Director of International Business Development, SETEC ITS (Société d'études techniques et économiques/Technical and Economic Studies Company, Intelligent Transportation Systems division)
  • Amadou Sy, Director of Investments, Meridiam; Founding Member, Afrikamaono

Welcome by Deborah Brautigam, Director, SAIS-CARI

Moderated by Marie Foster, Program Coordinator, SAIS-CARI


Many aspects of Sino-African relations receive biased or simplistic media coverage. This is especially true of highly nuanced issues, like the dynamics between Chinese and Western business activity in African countries. While most former colonial powers have seen their market shares across Africa decrease as China has grown its economic footprint on the continent, their total volume of trade with African countries has increased. In raw numbers, trade between the European Union and Africa has grown more than China-Africa trade over the past decade. These developments, along with various rumors and misconceptions, are often used to frame the situation as a zero-sum competition between China and the EU. The truth of the matter, however, is far more complex.

On November 10, the China Africa Research Initiative (CARI) hosted a panel discussion on the evolving landscape of French-Chinese business cooperation on the African continent. The event, conducted entirely in French, featured experts on the subject from both academia and the private sector. The panel followed the publication of “French and Chinese Business Cooperation in Africa,” a CARI policy brief written by Professor Thierry Pairault, who was one of the featured speakers at the event.

While media outlets often portray a narrative of direct contention between Western and Chinese businesses in Africa, Prof. Pairault’s fieldwork shows that French and Chinese contractors often cooperate on projects. Historically, these partnerships arose in an accidental or informal manner, but in the past few years firms have started proactively seeking out concrete partnerships. Chinese companies in Africa have naturally begun to partner with other foreign contractors as they have diversified their holdings. The French firm CGA CGM and China Merchants Port, for example, co-manage a number of African ports. Increasingly complex economic ties, both formal and informal, continue to mitigate conflict between French and Chinese companies. The Chinese government has sought a more active role in encouraging business cooperation, but French businesses and government officials prefer informal cooperation.

Jérémy Rubel explored the BRT (Bus Rapid Transit) project in Dakar, Senegal as a case study of collaboration between Chinese firms, European firms, African government entities, and multilateral organizations. The BRT is organized as a public-private partnership (PPP) between the World Bank, the private sector, and the Dakar government. In 2019, the World Bank awarded the contract for the infrastructure and systems portion of the project to Chinese firm CRBC (China Road and Bridge Corporation), which went on to subcontract systems work to the French company FARECO and the Chinese Jiangsu Huimin Traffic Facility Co. Ltd. Other European contractors are currently competing for the private sector operations portion of the PPP. The electric buses for the BRT will likely be sourced from a Chinese firm. Rubel made the case that as a whole, the Chinese framework is increasingly attractive for African public transit projects because it comes with Chinese systems technology, which is less normative but highly innovative, and the services of ambitious Chinese government-backed firms, which are willing to maintain a long-term presence in the client country to operate the project.

Amadou Sy closed the presentation portion of the panel by using his decade-long career working with Chinese firms in Africa as a starting point to discuss the evolution of the landscape. In his role at Egis International, Sy worked with Chinese contractors in the Congo to pioneer a rigorous new program that sent bilingual, highly-trained Chinese engineers to Beijing, Paris, and the Congo. The program led to a partnership between Egis and Chinese firms for the development and provision of services, which allowed Egis to work directly for Chinese contractors rather than for African governments. He noted that in 2014-2015, more Chinese companies began to arrive in the region, signaling a shift towards more intense competition. Sy now helps launch large and technically complicated invitations to tender in Africa, a role that has led him to conclude that the still-widespread belief that Chinese companies are less competitive is mistaken. Several large and technically complicated contracts have recently gone to Chinese firms thanks to recent cutting-edge advances in Chinese technology.

One key takeaway from the Q&A session following the presentations: unlike the Chinese, French companies and government agencies have not defined a cohesive narrative in which to frame French business activities in Africa. This reduces the visibility of French involvement relative to their Chinese partners. The speakers weighed in on several other topics during the Q&A, including the increased hiring of local workers for Chinese projects in Africa. Because Chinese firms now compete on more equal footing with other international contractors, wage levels determine the composition of their workforce. Recent salary increases in China mean that African labor is usually less expensive. Mr. Sy also noted that technology transfers from Chinese firms to African countries have become more substantial in recent years due to an influx of Chinese contractors, more aggressive competition, and greater African demand for technology. Finally, the panel explored the channels of influence available to French and Chinese actors abroad. French embassies are mostly political entities that operate separately from the AFD (French Development Agency), while Chinese embassies can be both political and economic tools due to the presence of a Ministry of Commerce-affiliated minister counselor in addition to an ambassador.

The video recording of the event (in French only) can be found below, and a longer English-language summary of the event is available upon request.

Monday, November 23, 2020

CARI Debt Analysis Outputs since April 2020

Photo credit: Shutterstock

Recent analysis by CARI researchers on Chinese lending in Africa

In assessing China’s approach to debt relief, CARI Research Manager Kevin Acker goes beyond China’s participation in the G-20 Debt Service Suspension Initiative (DSSI) and takes a look at the past two decades of Chinese debt relief. From these scenarios, Acker provides insight as to how China might handle the financial stress of the COVID-19 era. 

David Malpass, World Bank president and a Trump appointee, claimed that China Development Bank was a significant provider of development assistance to the low-income African countries covered by the G-20 Debt Service Suspension Initiative (DSSI) and should join the initiative. In fact, CARI data show that CDB lending in the DSSI countries is relatively small, and it is significant only in Angola. By pointing a finger at CDB, is Malpass deflecting attention from the World Bank's own failure to join the DSSI? Or is Malpass allowing the rising hostility between the United States and China to add additional challenges to cooperative action over debt debt relief in Africa?

Due to the pandemic, the G-20 announced an unprecedented agreement in April to suspend official bilateral debt service payments for the world's low income countries for the remainder of 2020. The Council on Foreign Relations suggested that China Export Import Bank would not join the DSSI. In this blog post, Deborah Brautigam analyzes the PRC’s intention to live up to its COVID-19 pledge on debt relief, suggesting that the CFR misread Chinese intentions. 

From modest beginnings in 1960, China has recently become a highly visible actor in Africa’s lending landscape. African borrowers have built roads, installed electrical grids, and modernized their airports with Chinese finance. When commodity prices and growth rates began to tumble in 2015, the specter of a new debt crisis arose. This briefing paper discusses CARI's latest data release on Chinese loan commitments to Africa. 

After several years of lacking data on outstanding debts to China among developing countries, Yufan Huang and Deborah Brautigam bring clarity to the subject by elaborating on the World Bank’s recently published debt statistics of 72 low-income nations. From the new numbers, they draw several conclusions based on how much debt these governments have and how much is owed to Chinese lenders. 

In the past two years, news headlines have periodically speculated that African borrowers are at risk of losing their sovereign assets to Chinese lenders. In this policy brief, Deborah Brautigam and Won Kidane explore what is known about the legal aspects of Chinese lending, including waiver of sovereign immunity clauses and the consequences thereof, and provide policy recommendations.

As China is poised to become the world’s largest creditor, concerns about debt sustainability have grown. Yet considerable confusion exists over what is likely to happen when a government runs into trouble repaying its Chinese loans. In this paper, Kevin Acker, Deborah Brautigam, and Yufan Huang draw on CARI data to review the evidence on China’s debt cancellation and restructuring in Africa, in comparative and historical perspective. Cases from Sri Lanka, Iraq, Zimbabwe, Ethiopia, Angola, and the Republic of Congo, among others, point to patterns of debt relief with distinctly Chinese characteristics.

Dr. Deborah Brautigam discusses the increased pressure China is facing to forgive its loans to Africa due to the recent pandemic and how it will react. By drawing upon examples of how China has managed tricky debt situations in the past, Brautigam debunks claims that China will seize assets or that it has written off half of Africa’s debt.

This blog post responds to a working paper by Horn, Reinhart, and Trebesch (HRT) about Chinese overseas lending, which states that half of China’s loans to low-income nations are hidden. Deborah Brautigam and Kevin Acker dispute their review of China’s “hidden lending” by comparing it with SAIS-CARI’s data, noticing some numbers have been underestimated and others overestimated. The analysis ends with a discussion about the key difference between loan commitments and loan disbursements, using Nigeria as a case study.