Called a secret lender around the world

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China represents a major shadow lender in the world. To such conclusion economists from Harvard, the University of Munich and Kiel Institute for the world economy, writes “Kommersant”.

China is already the largest official creditor of the world, second only to the USA on the total amount of loans. However, nothing is known about the Chinese export of capital, as Beijing does not report about it in the international financial institutions; agencies that comprise the credit ratings do not take into account this information in reports. However, the German and American economists revealed about thousands of loans, and three thousand of grants issued in China from 1949 to the year 2017 in the amount of $ 530 billion. According to them, half of lending remains a “shadow”.

The researchers explain that unlike other countries, China produces almost all loans via government: developed countries receive loans through redemption of sovereign bonds of the people’s Bank of China, developing through direct loans to Chinese state banks, which are often provided at market rates and with collateral in the form of oil.

According to official data, direct loans from zero in 1998, increased to $ 1.6 trillion in 2018 (that’s two percent of global GDP). Most of the loans occurred in States with low or average income. Taking into account repurchased sovereign bonds the amount of loans will increase to five trillion or six percent of world GDP. Together with foreign securities and direct investment in 2017 the size of the external financial obligations of the world to China exceeded eight percent of world GDP.

Economists argue that the top 50 borrowers debt to China according to conservative estimates increased from an average of one percent of GDP in 2005 to 15 percent in 2017. Most “shadow” Chinese debt is especially great for Venezuela, Zimbabwe and Iran.

According to researchers, the share of structures of China account for a quarter of Bank lending to emerging countries that allows China to get ahead of the international monetary Fund and the world Bank and become the largest official creditor. Economists noted that the jump in government loans and investments of unprecedented peacetime, and it can be compared only with the growth of lending by the United States after the two world wars.

Video, photo All from Russia.

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