China: China’s hidden debt a major problem for borrowers
“Hidden debt” is due to an increasing number of agreements concluded not directly between governments through central banks, but through often opaque agreements with a range of financing institutions, hence “The debt burden has not been recorded on the public balance sheets”, Radio Free Asia. reported citing a four-year study conducted by AidData.
“China’s debt burden is considerably higher than that of research institutes, rating agencies or intergovernmental organizations whose supervisory responsibilities were previously understood,” the study said.
The study also added that nearly 70 percent of China’s overseas loans “are now directed to state-owned enterprises, state-owned banks, special-purpose vehicles, joint ventures and government institutions. private sector in recipient countries “rather than sovereign borrowers who are government institutions,” Radio Free Asia reported.
Meanwhile, China also uses confidentiality clauses prohibiting borrowers from revealing the terms and conditions of the commitment or even the existence of the debt itself.
International Forum for Law and Security (IFFRAS), reported that recent joint research by the Peterson Institute for International Economics, the Kiel Institute for the World Economy and the Center for Global Development & Aid Data concluded that it used these contracts to get nations into debt.