The database reveals the secrets of China’s lending to developing countries, the study says

Dakar — The terms of China’s lending agreements with developing countries are very secretive, requiring borrowers to prioritize the repayment of China’s state-owned banks over other creditors, said Wednesday. A study of cash on contracts has shown.

The dataset, edited over a three-year period by Aid Data, the US Institute at the University of William & Mary, consists of 100 Chinese loan agreements with 24 low- and middle-income countries, many of which are in debt in the economy. I am suffering from an increased burden. Fallout from the COVID-10 pandemic.

Much focus is on the role of China, the world’s largest creditor, accounting for 65 percent of official bilateral debt worth hundreds of billions of dollars across Africa, Eastern Europe, Latin America and Asia. I will.

“China is the world’s largest public creditor, but lacks the basic facts about the terms of its loan,” authors, including Anna Gerpan, a law professor at Georgetown University in the United States, wrote in a paper. I am writing.

Researchers at AidData, the Center for Global Development (CGD) based in Washington, the Kiel Institute in Germany, and the Peterson Institute for International Economics have compared China’s lending contracts to those of other major lenders. Lending, according to CGD, created the first systematic assessment of the legal conditions of Chinese foreigners.

Their analysis revealed some anomalous features of contracts that extended standard contract tools to increase the likelihood of repayment, they said in a 77-page report.

These include confidentiality clauses that prevent borrowers from revealing the terms of the loan, informal collateral arrangements that benefit Chinese lenders more than other creditors, and protection of debt from collective restructuring. Includes what you promise. Said. The deal also added that China would provide substantial room to cancel loans and accelerate repayments.

G20 logo
On May 21, 2016, a slow shutter exposure of the G20 logo can be seen in Hangzhou, China. (FredDufour / AFP via Getty Images)

Scott Morriss, senior fellow at CGD and co-author of the report, found that the findings show the financial pressure of COVID-19 by allowing poor countries to overhaul their debt burdens.

Although this framework requires that all creditors, including private lenders, be treated equally, most of the contracts surveyed will allow countries to restructure their debt on the same terms as other creditors. He said he forbids that.

“This is a very impressive ban and seems to violate China’s G20 promise,” Morris told Reuters, but the Chinese administration said in a loan agreement these provisions. He added that it may not be enforced.

The Chinese Foreign Ministry did not immediately respond to the request for comment.

The materials researched by the researchers include 23 contracts with Cameroon, 10 contracts between Serbia and Argentina, and 8 contracts with Ecuador.

In January, the World Bank warned that some countries were in urgent need of debt relief due to the severity of the global recession caused by the COVID-19 pandemic.

Alessandra Prentice and Karin Strohecker