China's Lending to Developing Countries: From Boom to Bust

This paper provides a comprehensive overview of China's lending to developing countries—a central feature of today's international financial system. Building on our previous research and the work of others, we document the scale, destination, and terms of China's overseas lending boom, as well as the lending bust and defaults that have followed. We compare China's lending boom to past boom-bust cycles and discuss the implications of China's rise as an international creditor on recipient countries and sovereign debt markets. The evidence indicates that Chinese state banks are assertive and commercially sophisticated lenders. For recipient countries, however, the jury is still out: it remains to be seen whether the gains from China's lending—through growth and improved infrastructure—will outweigh the more immediate burdens of debt service or the multifaceted costs of default.