Bloomberg quotes Eric LeCompte on China's unilateral large-scale lending to low-income countries. Read an excerpt below, and click here for the full story.
China and Its Lenders Have to Join the Global Club
By Michael Schuman
Perhaps more importantly, Beijing must become far more transparent about its lending. China has been notoriously secretive about its aid programs. A 2019 study by the National Bureau of Economic Research in Massachusetts found that half of all Chinese overseas loans to developing countries have been “hidden,” as in not properly reported. This is in part the fault of the borrowing governments. But Beijing often insists on this secrecy. An analysis of Chinese loan contracts co-authored by Parks and released in March discovered that “the Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt.” This could easily muck up restructurings by making other creditors wary of cooperating due to a dearth of clarity on China’s loans.
Beijing ought to release its debtors from these stipulations when necessary to assist the restructuring process. Better still, the Chinese government should become more proactive in detailing the extent of its lending. The Organization for Economic Cooperation and Development manages a program for creditor countries to report their development assistance. China should participate.
Most of all, Beijing has to resist its urge to go its own way. Doubts remain that Beijing is fully committed to the G20 framework. Eric LeCompte, executive director of Jubilee USA Network, a coalition of organizations focused on anti-poverty issues, told me he believes “China’s preference is to be able to go it alone,” and cut its own deals.
Read the full article here.