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Report introduction. Chinese loan terms hamper post-virus debt negotiations

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Beijing (AP) – China’s loans to poor countries in Africa and Asia impose unusual secrecy conditions that undermine their ability to review their debts after the coronavirus epidemic. Wednesday’s report says a group of US-German researchers.

It warns of problems with Chinese lending that have escalated since Beijing launched its Zone Road Initiative in 2012 to expand trade with Asia, Africa, the Middle East, building railways and other infrastructure.

China has become one of the largest creditors, especially for developing countries, as the ruling Communist Party seeks to expand its global influence to match the country’s status as the second largest economy.

State-owned Chinese banks, unlike most official lenders, require foreign borrowers to keep their terms, sometimes even loans, secret, say researchers at William Mary College in Virginia, the German Kiel Institute for World Economy, and the Peterson Institute for International Economics in Washington.

Their report says Chinese banks are claiming repayment ahead of other lenders, which could hamper debt negotiations with creditor groups. It says borrowers are required to import oil or other income into foreign accounts that can be seized in the event of default.

The epidemic “boosted the repayment capacity of many borrowers,” but lenders “do not want to negotiate” without knowing what owes Beijing, said Bradley S., executive director of AidData AidData Laboratory at William և Mary College in Virginia. ,

According to the report, the amb ambia in South Africa has reached a deadlock in negotiations with bondholders who refuse to negotiate until they know its Chinese debts.

“The stakes are quite high,” Parks said. “If China is not at the table when those countries try to negotiate, it will be very difficult for the repaid countries to get out of this situation.”

The researchers looked at 100 contracts between Chinese “creditors” of Chinese creditors in 24 countries, for a total of $ 36.6 billion. The lender of 84 of them was the Export-Import Bank of China or the Development Bank of China.

Leaders of poor countries welcome Beijing lending, but Belt and Road has caused complaints that they owe too much debt. Kenyan gas station operators went on strike in 2018 after a fuel tax was imposed to repay Chinese loans for the railway.

“Researchers hope Beijing will encourage a ‘soul search’ for whether secrecy or other restrictions are needed,” Parks said. He said they hoped the borrowers would “make it a point to do their homework before they sign these contracts”.

Chinese officials received a copy of the report before it was released, responding with “detailed written comments” stressing the need to “mitigate the risk” of lending to weak economies.

“There was no request for us to change anything,” he said. “They wanted to make sure their prospects were clear.”

China’s official secrecy fosters protests, the help of which ումը lending can foster corrupt regimes or lower the environmental և human rights standards that Western donors seek to enforce.

Belt and Road officials say the initiative benefits all countries involved, and that the loans are provided on trade terms rather than as aid.

Chinese leaders have pardoned some Belt and Road borrowers, saying they want to keep the debt manageable. A report on Wednesday said Ecuador had reminded Chinese bankers of confidentiality, saying future lending could be jeopardized by leak details of the loan.

The researchers, led by AidData, released their first report in 2013, focusing on Chinese funding for Africa.

In 2017, a report showed that China was close to matching the United States as a source of official grant loans, but said that most of them served Beijing’s economic interests rather than the interests of the recipients. The 2018 report found that in Africa, “China-funded railways in Asia are helping to reduce economic disparities between countries and regions.”


AidData: https://www.aiddata.org/

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