CHina’s loan Poor countries are booming as governments struggle to repay their loans to state-owned lenders such as the Export-Import Bank of China and the China Development Bank. So how will China manage the countries on the verge of default? Does it show the solidarity that a developing country can expect from others? Or will it emphasize his pound of meat?
Some people think that default will be good for China. It is often accused of “debt-trapping diplomacy”: lending large sums of money to poor countries to confiscate their strategic assets, such as ports, when they cannot repay. Truth is more rhythmic. A new effort to calculate China’s debt restructuring shows that when faced with a debtor who can’t repay a loan, China mostly just kicks off the road.
A new study by Sebastian Horn and Carmen Reinhart of the World Bank and Christoph Trebesh of the Kill Institute for the World Economy contains 261 examples of debt relief or revision since 2000. The devaluation includes the rescheduling of 149 canceled or interest-free loans by China’s Ministry of Commerce, mostly in the 2000s when debt relief became a factor. Yes7 Government and Irish rock star. The other 28 were to allow countries with no major debt crisis as part of the payment holiday Yes20’s response to the epidemic. It correctly reconstructed 84 (of which 30 were part of the TO) Yes20 enterprises, but countries under financial pressure).
All 22 members of the Paris Club, an informal group of governments from rich countries, including the United States, Japan, and Britain, compared China’s total of 158 to 84 credit accidents (see chart). Just before the prices of oil and other commodities exported by African countries began to fall in 2014, China was probably unlucky to lend heavily in bad times. In almost all of these cases, China has given borrowers more time to repay their loans. In just four cases, it has reduced the face value of debt (Cuba, Iraq and Serbia, twice). Its approach is similar to that of Western lenders in the 1980s, when they rarely provided deep debt relief.
The epidemic could force China to move from tolerance to forgiveness. Otherwise the authors fear that a debt “overhang” could hinder the growth of poor countries. China has joined it YesThe “general structure” of the 20’s was for debt relief, in line with the Paris Club. To become a major lender to poor countries, China has followed in the footsteps of the club’s leading economic powers. It has also repeated many of their mistakes. Now it must follow them to write down some of his past mistakes. Who is the sister of China?
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This article was published in the Finance and Economics section of the print edition entitled “How to Default in China”