Author Meets Critics: "The Latecomer's Rise: Policy Banks and the Globalization of China’s Development Finance"

Session Submission Type: Author meet critics

Session Description

This is an author-meets-critics panel for Muyang Chen’s new book "The Latecomer's Rise: Policy Banks and the Globalization of China's Development Finance" (Cornell University Press, 2024).

Over the past decades, China has become the world's largest provider of bilateral development finance. Through its two national policy banks, the China Development Bank and the Export-Import Bank of China, it has funded infrastructure and industrial projects in numerous emerging markets and developing countries. Yet this very surge and magnitude of capital has raised questions about the characteristics of Chinese bilateral lending and its repercussions on the international order.

Examining policy banks in comparison with public financial agencies of advanced industrial economies, "The Latecomer’s Rise" illustrates and conceptualizes the distinctiveness of China’s development finance. Drawing on a variety of novel primary sources including interviews and official bank documents, the book shows that the conventional notion of “state intervention for industrial catch-up” inadequately elucidates China’s late development. Emerging from the country’s domestic experience transitioning away from a centrally planned economy, the Chinese approach to development finance demonstrates a mutually reinforcing state-market relationship. The state has created markets, empowered market entities, and employed market instruments to achieve public objectives that could not be achieved through fiscal allocation.

This market orientation explains why the Chinese government is reluctant to channel cheap capital, i.e., budgetary funding raised through taxation, to support Chinese banks’ lending or to bail out their failed projects. It also explains why most of the policy-bank loans carry relatively high interest rates than their international counterparts, why the banks collateralized host countries’ future revenue flows to finance projects, and why they have been hesitant to write down debts owed by borrowing countries.

China’s rise as a major development finance provider, therefore, yields more than a rivalry between a “state-led” latecomer and “liberal” rule-makers. While nurturing national champions and enabling them to compete with foreign firms, policy banks have also supported Chinese firms in undertaking projects that their Western counterparts have “left over.” Examining the issue areas of bilateral development finance, export credits, and sovereign debt relief, the book shows that China's responses to extant rules, norms, and practices have varied between contestation and convergence.

Panelists include Stephan Haggard (University of California, San Diego), Stephen Kaplan (George Washington University), Saori Katada (University of Southern California), and Margaret Pearson (University of Maryland).

Sub Unit

• Division 16: International Political Economy

Chair

• Stephan Haggard University of California, San Diego

Presenters

• Muyang Chen Peking University

• Stephen B. Kaplan George Washington University

• Saori N. Katada University of Southern California

• Margaret M. Pearson University of Maryland