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China’s Overseas Lending

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  • Horn, Sebastian
  • Reinhart, Carmen M.
  • Trebesch, Christoph

Abstract

Compared with China's pre-eminent status in world trade, its role in global finance is poorly understood. This paper studies the size, characteristics, and determinants of China's capital exports building a new database of 5000 loans and grants to 152 countries, 1949-2017. We find that 50% of China's lending to developing countries is not reported to the IMF or World Bank. These "hidden debts" distort policy surveillance, risk pricing, and debt sustainability analyses. Since China's overseas lending is almost entirely official (state-controlled), the standard "push" and "pull" drivers of private cross-border flows do not apply in the same way.

Suggested Citation

  • Horn, Sebastian & Reinhart, Carmen M. & Trebesch, Christoph, 2020. "China’s Overseas Lending," Working Papers 11, German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin.
  • Handle: RePEc:zbw:pp1859:11
    DOI: 10.18452/20585.2
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    More about this item

    Keywords

    China; trade finance; external debt; international capital flows; official lending; hidden debts; sovereign risk; Belt and Road initiative;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F6 - International Economics - - Economic Impacts of Globalization
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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