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Abstract
This thesis investigates the relationship between World Bank reactions to Chinese aid through a Great Power Competition lens, while also considering the literature on the rise of China. This paper centers on the question: Does the treatment a given African country receives from the World Bank change if it has been a recipient of Chinese aid? The existing literature suggests that financial institutions like the IMF in many instances act as proxies the hegemon, thus in the current global governance order following U.S. foreign policy objectives. Development aid in Africa provides an avenue for power competition between the U.S. hegemon and rising power China; Consequently, the World Bank may, similarly to the IMF follow U.S. foreign policy objectives and act as a proxy for hegemonic power, responding to Chinese investment in Africa in some way. The research question is investigated through two primary analyses using OLS regressions: The relationship between Chinese aid and aid amounts and World Bank classification (determining the conditions of loans), and the relationship between Chinese aid amounts and debt cancellation under the HIPC Initiative. The findings show a weak positive relationship between Chinese aid and World Bank classifications, and a stronger negative relationship between Chinese aid amounts and debt cancellations under the HIPC Initiative. Specifically, the more aid a given African country receives in the previous year, the more likely they are to have a higher World Bank classification, which indicates worse loan conditions. Simultaneously, under the HIPC Initiative, the amount of aid received does not seem to have a relationship with the approval for partial debt cancellation, but it does have a stronger negative relationship with the approval for full debt cancellation. Thus, receiving more Chinese aid the previous year makes a given African country less likely to be approved for full debt cancellation the following year. This suggests that the World Bank does employ limited sanctions and at times, aims to positively entice lending countries back into its sphere of influence, and thus American influence. This study serves as a first cut, and indicates that further research is needed, however, the results suggest that the World Bank to some extent does follow American policy objectives and serve as a power proxy for the U.S., although perhaps less than the IMF (as per Thacker, 1999).