UNIVERSITY OF EDUCATION, WINNEBA
FACULTY OF SOCIAL SCIENCE EDUCATION
DEPARTMENT OF POLITICAL SCIENCE EDUCATION
MASTER OF PHILOSOPHY IN POLITICAL SCIENCE EDUCATION
COURSE TITLE:
COURSE CODE:
LECTURER:
STUDENT NAME: RAPHAEL NYARKOH
STUDENT ID: 8252110023
TOPIC:
DEBT TRAP DIPLOMACY: A COMPARATIVE STUDY OF CHINESE AND WESTERN
DEVELOPMENT FINANCE IN GHANA
Background to the study
Over the past two decades, the landscape of international development finance has transformed
significantly, driven by the rise of China as a major global financier. While Western institutions
such as the International Monetary Fund (IMF) and World Bank have traditionally dominated
development funding through conditional aid and structural adjustment programs, China,
particularly through institutions like the China EXIM Bank has introduced an alternative,
infrastructure-focused model that emphasizes non-interference and resource-backed loans (Alden,
Large & Mendez, 2019; Chen, 2020).
This shift has sparked intense debate, especially around the concept of "debt-trap diplomacy," often
associated with China’s Belt and Road Initiative (BRI). Critics argue that China extends
unsustainable loans to weaker economies to leverage political influence or control strategic assets,
citing cases like the Hambantota Port in Sri Lanka, where China allegedly secured a 99-year lease
after Sri Lanka struggled to service its debts (Abi-Habib, 2018; Jones & Hameiri, 2020). However,
scholarly discourse remains divided; some researchers contend that accusations of deliberate debt
diplomacy are exaggerated political narratives without strong empirical backing, emphasizing that
many loans reflect broader economic and geopolitical factors (Gu et al., 2016; Roach, 2022;
Kaplan, 2016). Critics from Western nations argue that China’s opaque lending practices
undermine sovereignty and foster dependency, while others see these claims as geopolitical tools
used to challenge China’s expanding influence (Cormier, 2023; Humphrey & Michaelowa, 2019;
Winkler & Jerdén, 2023).
Ghana exemplifies a key context where these issues converge. As a strategic partner for both China
and Western donors, Ghana’s engagement with diverse financing sources offers a valuable case to
examine the realities of Chinese and Western development models. Chinese financing is often less
conditional than Western aid, prioritizes infrastructure, connectivity, and regional integration,
reflecting a pragmatic approach that blends aid, export credits, and commercial loans (Zou, Shen,
Zhang & Lee, 2022). Conversely, Western development finance, guided by institutions like the
IMF and the World Bank, adheres to principles of transparency, governance, and structural reforms
aimed at sustainable development and poverty alleviation (Alden, Large & Mendez, 2019; Paul,
2015). The contrasting objectives, conditionalities, and geopolitical implications of these financing
models highlight the complexity in understanding their impacts on Ghana’s development trajectory
and debt sustainability.
Statement of Problem
The debate surrounding "debt-trap diplomacy" in Chinese development finance is highly
contentious, often influenced by geopolitical narratives rather than empirical evidence. Critics
claim China's lending strategies impose unsustainable debts to extract concessions, while recent
scholarship challenges this view, highlighting limited instances of predatory practices and
emphasizing the distinct institutional logic behind Chinese finance, which prioritizes rapid
infrastructure development over conditional governance reforms typical of Western aid (Carmody
et al., 2022; Zhang, 2015; Singh, 2020; Carmody, 2020).
This discourse is further complicated by Western biases and the politicization of Chinese loans,
which often overlook the complex structural and institutional challenges faced by developing
countries like Ghana, including governance issues and global financial volatility (Yang and Van
Gorp, 2019; Breslin & Mattlin, 2025; Gu et al., 2016; Xia & Chen, 2023). While existing research
has begun to question the reliability of the debt-trap narrative, there remains a significant gap in
comparative analyses, particularly in examining how Chinese and Western financing mechanisms
differ in their institutional frameworks, developmental outcomes, and impacts on borrower agency
in Ghana (Brautigam, 2020; Ray et al., 2021; Vadlamannati & Brazys, 2021; Belder & Dipama,
2018). In particular, the lack of comprehensive comparative frameworks hampers understanding
of how varying loan deployment strategies influence debt sustainability, institutional reform, and
development results (Othman, 2024; Tekale, 2024). Ghana’s recent debt restructuring and
engagement with both Chinese institutions like the China EXIM Bank and Western entities such
as the IMF exemplify these divergent approaches (Brown, 2025; Cormier, 2023; Reinsberg et al.,
2024).
This study will aim to address these gaps by systematically comparing Chinese and Western
development finance in Ghana, focusing on their institutional logic, transparency, conditionalities,
and the role of local actors. Moving beyond polarized narratives, the research will seek to
contribute to an objective understanding of the complexities and implications of international
development finance in a multipolar world.
Research Objective
The study will be guided by the following objectives;
1. to compare the institutional frameworks and operational strategies of Chinese and Western
development finance mechanisms in Ghana.
2. to analyze the impact of Chinese and Western development finance on Ghana’s
development outcomes and debt sustainability.
3. to evaluate how perceptions of debt, sovereignty, and development are socially constructed
and contested among Ghanaian stakeholders.
Research Question
1. How do Ghanaian stakeholders perceive and describe the institutional frameworks and
operational strategies of Chinese and Western development finance mechanisms?
2. In what ways do Ghanaian actors experience and interpret the impact of Chinese and
Western development finance on the country's development outcomes and debt
management?
3. How are perceptions of debt, sovereignty, and development constructed, expressed, and
contested among Ghanaian stakeholders within the broader geopolitical and socioeconomic context?
Significance of the study
This study will make an important contribution to scholarly debates in international development
finance by offering a rigorous, evidence-based assessment of Chinese and Western lending
practices. It provides valuable insights for policymakers, development practitioners, and scholars
on how different financing models influence development outcomes, debt sustainability, and
sovereignty in a developing country context.
Literature Review
Since 2017, the narrative of debt-trap diplomacy has gained prominence through media, policy
debates, and geopolitics, suggesting that China deliberately grants unsustainable loans to
developing countries to extract strategic concessions (Kluiver, 2023). However, critical
scholarship questions this view, arguing that many publicly cited cases, such as the Hambantota
Port lease, are often misunderstood or lack nuanced context; in reality, these cases involve complex
negotiations rather than coercion (Moramudali & Panduwawala, 2024). Scholars like Khanum,
Daud, & Uddin (2023) and Savić & Lakić (2024) contend that the idea of debt-trap diplomacy
functions more as a political meme with limited empirical support. Others highlight the importance
of distinguishing lender intentions from borrower circumstances that lead to debt distress (Al
Barrak et al., 2023; Ferry & Zeitz, 2024). Additionally, Winkler & Jerdén (2023) argue that the
concept has been weaponized in geopolitical rhetoric, especially by Western actors seeking to
challenge China’s rising influence. Upon these growing arguments, the study will thematically
review literature on;
1. The Debt-Trap Narrative (Overview)
2. Empirical analyses of Chinese and Western Development Finance
3. Differences in aid conditionalities and terms
4. Impact of aid conditionalities on African’s development
5. The Belt and Road Initiative and Debt-Trap Diplomacy
Methodology
This study will adopt a qualitative, comparative approach using a multiple case-study design
focused on selected projects financed by Chinese and Western lenders in Ghana, such as the Bui
Dam and IMF-driven energy reforms. Purposive sampling will be used to select approximately 1015 key stakeholders, including those from China EXIM Bank, the IMF, the Ghanaian Ministry of
Finance, and project implementers, to ensure insight into institutional dynamics and outcomes.
Data will be collected through semi-structured interviews, documentary analysis of official reports
and agreements, and policy reviews. Interviews will be conducted in person or virtually, recorded,
and transcribed, while documents will be analyzed to triangulate findings. Ethical considerations
include obtaining informed consent, ensuring participant confidentiality, and securely storing data,
with ethical clearance sought from the relevant review board.
Theoretical framework
This study will be grounded in Economic Statecraft Theory (EST), introduced by David A.
Baldwin (1985), which explains how states use economic tools like aid and finance not just for
economic purposes but as instruments of geopolitical influence. Under EST, development finance
is seen as a strategic tool to achieve political goals such as influence and access to infrastructure
(Taggart & Power, 2024). The framework will be used to compare Chinese and Western lending
in Ghana, emphasizing their roles in geopolitical strategy through initiatives like China's Belt and
Road and institutions like the IMF and World Bank. The study will focus on observable lending
patterns and institutional logics to provide an empirically grounded understanding of development
finance as a tool of strategic influence.
Scope and Limitations of the Study
This study focuses on comparing Chinese and Western development financing in Ghana,
specifically examining their institutional frameworks, developmental impacts, and local
perceptions. The analysis is limited to projects and financial relations within Ghana over the past
decade, providing a contextual understanding of their implications for debt sustainability and
development outcomes.
However, the study has limitations, including potential biases in available data and narratives
surrounding Chinese and Western financing. The qualitative nature of the research may limit
generalizability beyond Ghana, and access to comprehensive, up-to-date financial details and
stakeholder perspectives could pose challenges. Additionally, the rapidly evolving nature of
international development finance means some findings may become outdated as new policies and
projects emerge.
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