Horn, Sebastian Reinhart, Carmen M. Trebesch, Christoph
Year of Publication:
Working Papers of the Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour" No. 11
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.
China trade finance external debt international capital flows official lending hidden debts sovereign risk Belt and Road initiative