Database reveals secrets of China’s lending to developing countries, study finds
DAKAR (Reuters) – The terms of China’s loan deals with developing countries are unusually secret and require borrowers to prioritize repayments from Chinese state-owned banks before other creditors, a study of a cache showed on Wednesday of these contracts.
The dataset – compiled over three years by AidData, a U.S. research lab at the College of William & Mary – includes 100 Chinese loan deals with 24 low- and middle-income countries, a number of which are struggling with burdens. growing debt in an economic context. fallout from the COVID-10 pandemic.
Emphasis was placed on the role of China, which is the world’s largest creditor, accounting for 65% of official bilateral debt worth hundreds of billions of dollars in Africa, Eastern Europe, in Latin America and Asia.
“China is the world’s largest official creditor, but we lack basic facts about the terms and conditions of its loans,” wrote the authors, including Anna Gelpern, professor of law at Georgetown University in the United States. United, in their article.
Researchers from AidData, the Washington-based Center for Global Development (CGD), the German Institute in Kiel, and the Peterson Institute for International Economics compared Chinese loan contracts with those of other major lenders to produce the first systematic assessment of legal loan conditions, according to CGD.
Their analysis revealed several unusual features of the agreements that expanded standard contractual tools to increase the chances of repayment, they said in the 77-page report.
These include confidentiality clauses that prevent borrowers from revealing loan terms, informal collateral agreements that benefit Chinese lenders over other creditors, and promises to keep debt away from collective restructuring – qualified by the authors of clauses “without club of Paris”, according to the mentioned report. The contracts also give China substantial leeway to cancel loans or speed up repayment, he added.
Scott Morris, senior researcher at CGD and co-author of the report, said the findings raised questions about China’s role as one of the major G20 countries that agreed to a “common framework” designed to help the poorest countries cope with financial problems. pressure from COVID-19 by allowing them to review the debt burden.
The framework calls for comparable treatment of all creditors, including private lenders, but said most of the contracts reviewed prohibited countries from restructuring such loans on equal terms and in coordination with other creditors.
“This is a very striking ban, and it seems to go against the commitments made by the Chinese at the G20,” Morris told Reuters, while adding that it was possible that China would simply not enforce. these clauses in its loan contracts.
China’s Foreign Ministry did not immediately respond to a request for comment.
China has said in the past that its financial institutions, and not just the country’s official creditors, are working to help ease the debt problems of African countries.
He also said in November that he had granted debt relief to developing countries worth a total of $ 2.1 billion under the G20 program, the highest among the group in terms amount carried forward.
The material reviewed by the researchers for the study includes 23 contracts with Cameroon, 10 with Serbia and Argentina, and eight with Ecuador.
In January, the World Bank warned that several countries were in urgent need of debt relief due to the severity of the global recession triggered by the COVID-19 pandemic.
Reporting by Alessandra Prentice and Karin Strohecker; Additional reporting by Andrea Shalal; Editing by Muralikumar Anantharaman