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Accepted Paper:
Networks of the Belt & Road: The Hidden Role of Financial Brokers
Ammar Malik
(AidData)
Alexandra Joosse
(William Mary)
With it's vast scope and granularity on actors involved in China's overseas development finance program, AidData's Global Chinese Development Finance Dataset enables this deep dive into the role of Western private financing institutions in bolstering the effectiveness of Belt & Road Initiative.
Paper long abstract:
International financial networks supporting large infrastructure projects involve a plethora of visible and hidden actors working together as financiers, co-financiers, recipients, insurers, and implementers. Most policy analyses of China’s Belt and Road Initiative, however, focus exclusively on the senders or recipients of financial flows, without considering the crucial role of financial brokers bridging structural holes that are endemic to large financial networks. Using detailed information from AidData’s newly released Global Chinese Development Finance Dataset, apply structural holes analysis to identify key co-financiers enabling Chinese overseas development projects. We find that projects involving the top-20 intermediaries have 43% greater commitment values than average and are 19 times more likely to be financed through syndicated loans. Beijing engages these reliable intermediaries in riskier projects, likely as a risk mitigation tool, and increasingly through syndicated loans. With over 86 of projects involving top-5 intermediaries committed in the first five years of the BRI-era having a combined value of $11.5 billion, this is the first-ever systematic investigation into this underexplored aspect of Chinese development financing.