Bartering Globalization: China's Commodity-backed Finance in Africa and Latin America

In just over a decade, China has become a source of finance for emerging market and developing country governments. Recipient governments and the Chinese have been less than transparent with respect to the scale, terms and composition of this finance, engendering a great deal of speculation about its nature. This article provides preliminary estimates of Chinese finance to both Africa and Latin America since the turn of the century, with a specific focus on ‘commodity-backed’ or ‘resource-secured’ loans. We estimate that Chinese banks have provided approximately $132 billion in financing to African and Latin American governments and state-owned firms since 2003. Just over half of these, or $75 billion, are in the form of resource-secured finance. Contrary to many of the claims in the popular press, we found that Chinese finance is generally not out of line with interest rates found in global capital markets, does not bring windfall commodity profits to China, and does not mandate the use of Chinese workers.