China to the Rescue? The Implications of China’s Engagement with Resource-Rich Countries

China’s interest in developing countries has exploded in the past decade as it continues to search for resources to fuel high growth rates. This paper examines China’s activity in various resourcerich countries through the lens of the resource curse. What are the implications of China’s involvement in developing countries in terms of the resource curse, and what factors or circumstances determine whether a country will benefit from these strategic relations with China? By viewing the resource curse in terms of specific challenges associated with resource wealth rather than an overarching curse, I analyze how China’s involvement has altered the severity of certain challenges in African and South American countries. While China has provided economic booms and an alternative to western financial institutions, it has accentuated the internal aspects of the resource curse. In the end, relative success of resource-rich countries depends upon initial conditions, type of resource, country size and its ability to effectively negotiate beneficial terms, investment in productive activity, and responsible fiscal management including the use of stabilization funds.