China and Africa: A new narrative on debt sustainability and infrastructure financing

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Abstract

Strategic and collective efforts are needed from both the creditors and borrowing countries facing the looming debt crisis, with a full understanding of what are good debts and what are bad debts depending on how they are used. The current narrative on debt sustainability often ignores the issue of what a government owns (assets) versus what a government owes (liabilities). While conventional approaches largely focus on the liability side, the kinds of assets a country tries to build are vital to economic development and debt sustainability. This paper proposed a new narrative on debt sustainability and thoughts on infrastructure financing under the circumstance of debt restructuring. The empirical part of the study presented both the conventional and a novel method to investigate the role of completed infrastructure projects, co-financed and jointly built by China and African countries, focusing on whether and to what extent they have addressed infrastructure bottlenecks. Both methods validate the hypothesis that China-financed and completed projects match the host country?s most backward sectors and address their development bottlenecks. These completed projects form a part of a country?s public operational assets that generate essential social services, jobs, government revenues, exports and growth.

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APA

Wang, Y., & Xu, Y. (2023). China and Africa: A new narrative on debt sustainability and infrastructure financing. Journal of Infrastructure, Policy and Development, 7(1). https://doi.org/10.24294/jipd.v7i1.2181

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