About half of China’s loans to developing countries are ‘hidden,’ study finds

CNBC
Date: Jul 12, 2019
By: Weizhen Tan@WEIZENT

KEY POINTS

  • Between 2000 and 2017, other countries’ debt owed to China soared ten-fold, from less than $500 billion to more than $5 trillion, according to the study from Germany-based think tank the Kiel Institute for the World Economy.
  • For 50 developing countries which have borrowed from China, that debt has increased on average from less than 1% of their GDP in 2015, to more than 15% in 2017, according to estimates by the study’s researchers.
  • The documentation of China’s lending has been at best “opaque,” the report said, with such transactions “missed even by the most ambitious recent attempts to measure international capital flows.”
Italian Premier Giuseppe Conte meets Chinese President Xi Jinping to sign trade agreements on Belt and Road Initiative, on March 23, 2019 in Rome, Italy.
Antonio Masiello | Getty Images News | Getty Images

Italian Premier Giuseppe Conte meets Chinese President Xi Jinping to sign trade agreements on Belt and Road Initiative, on March 23, 2019 in Rome, Italy.

Antonio Masiello | Getty Images News | Getty Images

China’s lending to other countries has surged in the past decade, causing debt levels to jump dramatically, and as much as half of such debt to developing economies is “hidden,” a new study has found.

Such “hidden” debt means that the borrowing isn’t reported to or recorded by official institutions such as the International Monetary Fund (IMF), the World Bank, or the Paris Club — a group of creditor nations.

Between 2000 and 2017, other countries’ debt owed to China soared ten-fold, from less than $500 billion to more than $5 trillion — or from 1% of global economic output to more than 5%, according to the study from Germany-based think tank the Kiel Institute for the World Economy.

“This has transformed China into the largest official creditor, easily surpassing the IMF or the World Bank,” the report’s researchers said.

The study, which looked at nearly 2,000 Chinese loans to 152 countries from 1949 to 2017, was undertaken by well-known debt expert Carmen Reinhart from Harvard University, as well as Kiel Institute’s Christoph Trebesch and Sebastian Horn.    [FULL  STORY]

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