Chinese Credit Lines in Kenya: Linked to Natural Resources?

Abstract

This study examines China-Kenya financial engagement in the context of the discovery of natural resources in Kenya. Based on the analysis of the outcomes of financial instruments, we use trade dependence hypotheses to determine whether financial outcomes are influenced by perceptions of China’s dependence on Kenya’s market and China’s quest to access discovered natural resources. It is argued that between 2006 and 2011, China’s dependence on Kenya’s market did not influence perceptions of negotiators leading to “unfavourable” financial outcomes, however, this changed in the context of China’s quest to access discovered natural resources between 2012 and 2015, thus leading to “favourable” financial outcomes. The significance of the findings is that China provided more liberalized credit lines to the Kenyan government after Chinese firms began to express more interest in natural resource extraction.