Assessing The Relationship Between Chinese Capital Flows And African Debt Sustainability

Chinas new foray into Africa is attracting much international at-tention and contentious debate. China is seemingly engaging Africa on new terms terms that are not shaped by traditional powers, nor perhaps even by Africans themselves. Particularly in a period where Western donors and economic powers are often occupied with their own domestic issues, China enlarges its field and intensifies economic ties. This paper tentatively wants to shed light on this engagement by evaluating the influence of financial capital flows from China on the debt sustainability and country risk of selected African countries. For this reason bond ratings are estimated on several macroeconomic variables and included as an independent variable into sovereign yield spread regressions in order to evaluate the impact.