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The biggest headline from November’s FOCAC meeting was China’s pivot away from infrastructure funding. But like many FOCAC headlines, it needs several asterisks. In the first place, the pivot might actually be away from a particular infrastructure model (massive projects funded with large bilateral Chinese policy bank loans and built by Chinese state-owned enterprises) ...

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As I’ve long argued, historical precedents should have made clear that the rapid expansion of Chinese lending to the poorest developing countries had more to do with misunderstanding risk than with nefarious political schemes.

In the past last few years, especially after the Venezuelan experience in 2015, it seemed obvious to me that as the financial consequences of misunderstanding risk became clearer, this kind of lending would decline. I think it will continue.

Michael Pettis, Professor of Finance at the Guanghua School of Management at Peking University, China

Twice-weekly podcast dedicated to exploring every facet of China's engagement in Africa. Hosted by Eric Olander and Cobus van Staden.
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