China has issued so-called hidden loans worth $ 385 billion, which charge more than Western development agencies so that poorer countries do not have to reveal their existence, a report released on Wednesday shows.
the AidData project from William & Marys Global Research Institute found that 42 countries have China’s national debt exposures greater than 10% of GDP, which is often hidden from the World Bank’s debtor reporting system because the recipients of the loans are not central governments.
According to AidData, the average government fails to disclose its actual and potential repayment obligations to China for an amount equal to 5.8% of its GDP.
Instead, China lends to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries. Most of them benefit from explicit or implicit forms of liability protection provided by the host government, the report said.
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 28-year repayment period from a lender such as Germany, France or Japan, it is said in the report.
The report, which focuses on China’s Belt and Road Initiative, includes projects approved between 2000 and 2017 and implemented between 2000 and 2021.