China’s Multi-Front Institutional Strategies in International Development Finance

Abstract

Abstract China has expressed its dissatisfaction with aspects of the international development finance regime for many years, related to issues such as its lack of voting power and an insufficient focus on infrastructure spending by traditional multilateral development banks. To address these dissatisfactions, China has utilised a range of approaches, from the application of pressure inside existing institutions, to building outside pressure in the form of using alternative institutions or creating new ones. But how has the combination and timing of these different measures impacted its success in ultimately securing reforms? Applying insights from the institutional choice literature, we find that China has pursued both inside and outside measures to try to secure its objectives in development finance with varying degrees of success. Simply combining these measures has been insufficient to secure success however. In cases where China has exerted internal leverage prior to utilising outside options, it has been the most successful. We conclude that combination and sequencing of these approaches is an under-appreciated factor in determining success of dissatisfied states in securing changes to institutions.