Meeting in the Middle? Multilateral Development Finance, China, and Norm Harmonization

Abstract

Meeting in the Middle?Multilateral Development Finance, China, and Norm Harmonization Susan Park (bio) International norms are strong when they are taken for granted and followed automatically.1 Through contestation, norms may erode over time as challengers focus on how to procedurally follow the norm or substantively interrogate the idea itself.2 Some scholars have observed that norms may be contested because actors can seek to reject, revise, or deny the purpose of the norm.3 Yet norms can prove resilient and robust even in the face of opposition, highlighting the importance of structural factors as they relate to a norm's embeddedness, institutionalization, and legal character.4 In the 1990s, China was viewed as a novice in multilateral forums, and it was hoped that China would be socialized into international norm adherence through engagement in multilateral economic and security settings.5 Decades on, China is now promoting and changing international norms within multilateral institutions that may fundamentally reshape how finance, trade, development, and energy policy are practiced.6 [End Page 61] The scholarship on China and norms has emphasized its role shifting from being a norm-taker to a norm-maker.7 This essay examines how China's changing role in multilateral development finance is opening an ambiguous space for the reconciliation of a variety of development finance norms with Chinese practices, specifically through inside and outside pathways that could lead to norm harmonization. The first section looks at how China is fundamentally reshaping traditional, Western-led multilateral development finance. The section examines the institutions created by China to pursue Beijing's own international development agenda. The essay then unpacks how responses to Chinese development finance are reshaping Western activities that open the way for harmonizing some multilateral development norms, such as environmental protection. The question remains as to whether this harmonization process will lead to China leveling up to meet international norms, whether certain norms may weaken to enable China to follow them, or whether China and these norms may meet somewhere in the middle. For decades, international development was driven by the Western-led Bretton Woods institutions—the International Monetary Fund (IMF) and the World Bank. Highlighting how policy norms could be taken up and diffused to borrowers,8 the IMF and World Bank promoted neoliberal "Washington Consensus" policies in the 1980s, which morphed into the post–Washington Consensus approach in the 1990s to incorporate good governance, gender, development, environmental, and social protection norms, among others. Although this approach experienced some decline following the global financial crisis,9 the IMF and World Bank remain engaged in maintaining the neoliberal economic paradigm they constructed in their activities.10 International political economy scholars have noted how China's promotion of international development has been fundamentally at odds with the neoliberal prescriptions offered by the IMF and the World Bank that have been greatly supported by the West. At heart, China has [End Page 62] instead promoted a strong neo-statist approach toward development that, while emphasizing the capitalist model,11 is underpinned by China's advocation for norms of South-South cooperation, nonintervention, and state sovereignty. Of course, this description only scratches the surface of how China promotes international development. Beyond Beijing's instantiation of the Belt and Road Initiative (BRI), the sheer volume and different modalities of development lending by China's banks far outweigh those promoted by multilateral development finance institutions.12 Moreover, the methods for promotion, labeled a "coordinated credit space" by Gregory Chin and Kevin Gallagher, demonstrate how China provides credit to both development projects and the creditors and project suppliers. China's comprehensive, wrap-around model of development lending is fundamentally different from the conditionality of the Bretton Woods institutions (with critics arguing that it contributes to China's debt-trap diplomacy).13 Chinese support not only covers single, existing projects but also may lock states into further projects that are not yet viable, leading to loans for resource agreements. More broadly, China may provide lending for states that have never been targeted for Western loans.14 The effects of China's development lending activities have been threefold: first, they have influenced existing multilateral development institutions to change their development lending practices; second, they...