China made $ 385 billion in hidden loans abroad, report says

China has signed $ 385 billion in so-called hidden loans, charging more than Western development agencies so poorer countries do not have to disclose their existence, a report released Wednesday showed.

The William & Mary’s Global Research Institute AidData Project found that 42 countries now have levels of public debt exposure to China greater than 10% of GDP, often hidden from the World Bank’s debtor reporting system because the recipients of the loans are not central governments .

The average government underreports its actual and potential repayment obligations to China by an amount equivalent to 5.8% of its GDP, according to AidData.

Instead, China provides loans to state-owned enterprises, state-owned banks, special purpose entities, joint ventures, and private sector institutions in recipient countries. Most of them enjoy explicit or implicit forms of host government liability protection, according to the report.

A typical loan from China has an interest rate of 4.2% and a repayment period of less than 10 years, compared to the typical interest rate of 1.1% and a repayment period of 28 years. ‘a lender like Germany, France or Japan, according to the report.

The report, focused on China’s Belt and Road Initiative, covers projects approved between 2000 and 2017 and implemented between 2000 and 2021.

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