HKS Authors

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China’s growing role in international finance has remained obscure, mostly due to a lack of data and transparency. The authors’ research, based on a comprehensive new data set, reveals that between 1949 and 2017, the state and its subsidiaries lent about $1.5 trillion to more than 150 countries across the globe — much of which has been hidden from public view. They found that China tends to lend at market terms, meaning at interest rates that are close to those in private capital markets, rather than the concessional rates offered by other official entities, such as the World Bank or IMF. And their analysis found that 50% of China’s loans to developing countries go unreported, which distorts the views of the official and private sectors in three material ways: 1) Official surveillance work is hampered when parts of a country’s debt are unknown. 2) Private sectors will misprice debt contracts, such as sovereign bonds, if they fail to grasp the true scope of a government’s debts — a problem that’s compounded by the collateral clauses in many Chinese official loans, meaning that China will get preferential treatment when it comes to repayments. And 3) Forecasters of global economic activity are missing an important swing factor influencing aggregate global demand.


Horn, Sebastian, Carmen M. Reinhart, and Christoph Trebesch. "How Much Money Does the World Owe China?" Harvard Business Review 26 (February 2020).