Globalizing patient capital : the political economy of Chinese finance in the Americas

"China's overseas financing is a distinct form of patient capital that marshals the country's vast domestic resources to create commercial opportunities internationally. Its long-term risk tolerance and lack of policy conditionality has allowed developing economies to sidestep the fiscal austerity tendencies of Western markets and multilaterals. Employing statistical tests and extensive field research across China and Latin America, Stephen Kaplan finds that China's patient capital endows national governments with more room to maneuver in formulating domestic policies. The author goes on to evaluate the potential costs of Chinese financing, raising the question of how Chinese lenders will react to developing nation's ongoing struggles with debt and dependency. By disaggregating the structure of international finance, Globalizing Patient Capital has significant implications for the rise of China in Latin America, offering new insights about globalization and showing the costs and benefits of state versus market approaches to development." --Descripción del editor Half-title page Title page Imprints page Dedication Contents List of Figures List of Tables Acknowledgments Part I China As a Rising Global Creditor 1 Introduction: China’s Latin American Bankers 1.1 Bamboo Economics 1.2 Opening the Chinese Window of Financial Opportunity 1.3 China’s Patient Capital: Financing National Development 1.4 Banking with State-to-State Debt vs. Market Equity 1.5 Patient Capital Relaxes the Twentieth-Century Trilemma 1.6 Policy Conditionality vs. Commercial Conditionality 1.7 China’s Latin American Roots 1.7.1 Latin America’s Quixotic Quest for State Capacity 1.8 Plan of this Book 2 The Emergence of Chinese Patient Capital 2.1 Chinese Credit and the Quest for Global Market Share 2.2 China’s “Go Global” Economic Strategy 2.2.1 The Geopolitical Dimension 2.2.2 The Geoeconomic Dimension 2.2.3 The Domestic Dimension 2.2.4 The Development Dimension 2.3 China’s Policy Banks: Maximizing Markets, Not Profits 2.3.1 CDB’s Global Banking 2.3.2 Tied Aid and the Export-Import Bank of China 2.3.3 Chinese Policy Banks Financing Instruments 2.4 Patient Capital’s Costs and Benefits 2.4.1 Government Subsidies 2.4.2 The Administrative Channel 2.4.3 China’s Domestic Financial Strength and Vulnerabilities 2.5 The Persistence of China’s Patient Capital 3 Globalizing Patient Capital 3.1 A Structural Shift in Sovereign Borrowing 3.2 Global Capital Mobility: State vs. Market 3.2.1 A Shifting Twenty-First-Century Trilemma? 3.3 The Creditor Framework 3.3.1 Long-Term Maturity Horizon 3.3.2 High Risk Tolerance 3.3.3 The Lack of Policy Conditionality 3.4 The Debtor Framework 3.4.1 The Search for State Capacity 3.4.2 Latin America Gains Infrastructure and Fiscal Space 3.4.3 The Strength of the Market Governance Legacy 3.5 The Creditor-Debtor Framework: Patient vs. Impatient Capital 3.5.1 External Financing: China vs. Western Creditors 3.5.2 Domestic Investment Channel: State vs. Market 3.6 Policy vs. Commercial Conditionality 3.6.1 Chinese Foreign Content 3.6.2 Commodity Guarantees 3.6.3 Variable Interest Rates 3.7 Conclusion 4 The Political Economy of Chinese Finance 4.1 From Wall Street Wingtips to Shanghai Monk-Straps 4.2 Empirical Design 4.2.1 State-Led Financing: The China Global Finance Index 4.2.2 The National Investment Channel 4.2.3 Methodology 4.2.4 Data Description 4.2.5 Model Specification 4.3 Empirical Results 4.3.1 The Effect of Different Types of Sovereign Financing on Fiscal Balances 4.3.2 Chinese Loans: Supply- and Demand-Side Determinants 4.3.3 The Effect of Chinese Bilateral Lending on Fiscal Policy 4.3.4 Bilateral Lending and Chinese Commercial Conditions 4.4 Conclusion Part II Latin America As a Chinese Debtor 5 Chinese Financing and Latin American Fiscal Space 5.1 Global Finance and Domestic Governance Channels 5.2 Case Study Design: The Latin American Experience 5.3 Policy Expectations: Patient vs. Impatient Capital 5.4 Comparative Case Evidence: Patient Capital in Venezuela 5.4.1 Crafting a New State Investment Architecture 5.4.2 Chávez’s State Expansion in Venezuela 5.4.3 A China-Infused Fiscal Expansion? 5.4.4 Hedging Venezuelan Bets with Chinese Characteristics 5.5 Varieties of Chinese Finance in the Americas 5.5.1 Bolivia: Within Case Variation 5.5.2 Ecuador: Patient Capital or Patient Restructuring 5.5.3 Argentina: Diluting Public Tenders 5.5.4 Costa Rica and Jamaica: Single-Project Exemptions 5.6 Conclusion 6 Public Procurement’s Check on Fiscal Expansion 6.1 Comparative Case Evidence: Argentina and Brazil 6.1.1 Macri-Economics with Chinese Characteristics 6.1.2 Returning to Public Tenders in Argentina 6.1.3 Public Procurement in Brazil 6.1.4 Brazil’s Big Bang: The History of the State and Market 6.1.5 Brazil’s Market Institutions Limit Policy Discretion 6.1.6 The Market Constraint under Rousseff 6.1.7 Chinese Investment under Temer and Bolsonaro 6.2 Conclusion 7 International Loans with Commercial Strings Attached 7.1 China’s Commercial Conditionality 7.1.1 The Evolving Nature of Chinese Investment Instruments 7.2 The State-to-State Channel and Chinese Commercial Content 7.3 Hedging Sovereign Risk with Commodity Guarantees 7.4 Variable Interest Rates, Moral Hazard, and Indebtedness 7.5 Conclusion 8 Conclusion: A Dynamic Creditor-Debtor Relationship 8.1 Strategic Competition Shifts US-China Economic Relations 8.2 China’s Debt Trap Diplomacy or Creditor-Trap Dilemma? 8.3 China’s Creditor Learning Curve 8.4 Latin America’s Debtor Learning Curve 8.5 Patient Capital in a Post-Coronavirus World A Chapter 4 Appendix a.1 Appendix Overview a.2 Data and Methods: Methodology a.3 Data Description: Control Variables a.4 Robustness Checks: Second-Stage Results B Chapter 5 Appendix Bibliography Index "China's overseas financing is a distinct form of patient capital that marshals the country's vast domestic resources to create commercial opportunities internationally. Its long-term risk tolerance and lack of policy conditionality has allowed developing economies to sidestep the fiscal austerity tendencies of Western markets and multilaterals. Employing statistical tests and extensive field research across China and Latin America, Stephen Kaplan finds that China's patient capital endows national governments with more room to maneuver in formulating domestic policies. The author goes on to evaluate the potential costs of Chinese financing, raising the question of how Chinese lenders will react to developing nation's ongoing struggles with debt and dependency. By disaggregating the structure of international finance, Globalizing Patient Capital has significant implications for the rise of China in Latin America, offering new insights about globalization and showing the costs and benefits of state versus market approaches to development." --Descripción del editor This book is for scholars and practitioners examining the costs and benefits of China's economic expansion into the Western Hemisphere. It assesses how China's state-led capitalism, a form of 'patient capital' characterized by long-term risk tolerance and a lack of policy conditionality, affects national-level governance across the Americas.