China's Overseas Lending

NBER Working Paper No. 26050

Issued in July 2019, Revised in May 2020

NBER Program(s):Development Economics, International Finance and Macroeconomics, International Trade and Investment



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.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w26050