Beyond the narrative : tracing Wall Street Consensus logic in China's financing of Standard Gauge Railway (SGR)

Abstract

China’s emergence as a major infrastructure financier for the Global South arrived alongside a powerful normative claim that its development finance is an alternative to the Western conditionality-based finance, one grounded in South-South solidarity, respect for sovereignty, and mutual benefit. Ramo (2004) articulated this claim as the Beijing Consensus, positioning Chinese lending in deliberate contrast to the Washington Consensus model that had long disciplined developing countries borrowing from Western institutions through explicit policy prescriptions. Yet an accumulating body of empirical evidence has provided a complicated picture of this narrative without fully addressing the analytical puzzle it extends. This literature does not pose Chinese lending as solely solidarity-based cooperation or deliberate perdition, but then it raises an important query as to what governance logic then its financing instruments structure in practice? This thesis addresses that question by applying Gabor’s (2021) Wall Street Consensus framework to the financing architecture of Kenya’s Standard Gauge Railway which is the largest Chinese-financed infrastructure project in East Africa, arguing that China’s Eximbank’s lending for the SGR operationalizes three core mechanisms; sovereign de-risking, bankability engineering, and contractual financial discipline, through bilateral export credit contracts, despite Beijing Consensus framing characterize broader Chinese development finance. This study employs process tracing within a single-case design, tracing these mechanisms across four chronological phases of the lifecycle of the SGR financing, from procurement and loan negotiations occurred between 2012 and 2014, through implementation and operationalization, to the escrow collapse and formal default in 2021 to 2022. The empirical evidence of the study is predominantly drawn from the released SGR loan contracts, Kenya National Audit Office reports, IMF country reports, and AidData records. The findings confirm that all three mechanisms are present, and traceable at the level of specific contract provisions. The study also flags an important analytical boundary that the macroeconomic restructuring dimensions, that Gabor (2021) highlights, do not travel to the contract level of a single bilateral project, which marks a genuine limitation for a mechanism-tracing within case claim. Theoretically, the study extends the WSC framework from its original Western institutions, highlighting that its governance logic is not limited to the multilateral development banking but rather it marks a structural feature of large-scale infrastructure lending that any sufficiently large creditor finds rational when dealing with repayment risks in high-risk environments. This finding reframes the gap between Beijing Consensus rhetoric and operation practice not as an evidence of bad faith, but hints to a predictable outcome when protecting billions in sovereign lending is involved.