Chinese State Capital as a Partner for Resource-Based Structural Transformation? The Belt and Road Initiative and Downstream Linkages in Bolivia and Kazakhstan

Lee argues that outbound Chinese state capital (CSC) is distinct from global private capital in terms of a greater willingness to accommodate recipient country priorities. This article uses the cases of Kazakhstan and Bolivia to explore this claim in relation to state-led efforts to foster structural transformation via upgrading in extractive industries (lithium and iron/steel in Bolivia, and petrochemicals in Kazakhstan). We focus particularly on attempts to move into domestic downstream processing. The article explores variation in the degree of accommodation with local demands on the part of CSC and proposes an explanatory framework for these differences, grounded in three axes. These are (i) mix of BRI drivers motivating a particular project from the Chinese side (export of industrial surplus, political relations with partner states and/or concern for resource security); (ii) nature of state-capital investment partnership (the mix of Chinese institutions and firms involved in negotiating and implementing the deal, as well as the time horizon implied by contract type); and (iii) a range of local contextual factors such as availability of alternative sources of capital, host state industrial capacities and local political conditions. Further research will be needed to refine and test this framework across other sectors and developmental goals beyond upgrading in extractives.