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China Banks Outperforms the World Bank

The China Development Bank and the China Export Import Bank made loans of over $110 billion last year while the World Bank made loans of just over $100 billion. The nature of these loans has been interesting and illustrates the strategic needs of the Chinese. There were a number of loans based on access to oil from Venezuela, Brazil and Russia. There were loans to help develop infrastructure in nations that are seeking to expand production of everything from iron ore to electric power. There were also loans that were tied to expansion of Chinese exports. The volume of trade between China and Africa has increased by over 300% a year for the last five years in a row and much of that expansion has been fueled by this high level of Chinese investment.

Assessment: The investment from China is like all investment – designed to accomplish multiple goals. At the end of the day the effort is supposed to be profitable and China is not simply hurling money at states with no hope of a return. The cash is supposed to help these states develop their resources and to help them become a better market for Chinese goods. This is exactly the same motivation that has underscored the actions of the World Bank. In addition there is a more overt political goal. China has been aggressive in investing innations that are hostile to the US and Europe to one degree or another. Venezuela’s leader has been propped up to a significant degree by China and even should Chavez be removed from power someday, the Chinese have developed very close ties. The Chinese do not have the restrictions the World Bank works under. They are engaged with regimes that have been cut off by the World Bank to one degree or another and Chinese money comes with fewer strings attached as a rule – at least fewer political strings.  Courtesy Dr. Chris Kuehl, Armada Corporate Development and a  member of the BIIA Board of Directors

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