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Researchers Challenge Boston University’s “Porous Dataset” That Purportedly Showed a Plunge in Chinese Overseas Lending

A pair of researchers from Central Asia are questioning the findings of a new dataset produced by Boston University’s Global Development Policy Center (GDPC) which purportedly shows a sharp drop in Chinese overseas lending.

Among the key findings published last week by the GDPC that garnered considerable media attention around the world, including CAP, was the plunge in lending from $75 billion in 2016 to just $4 billion last year.

Niva Yau, a researcher at the OSCE Academy in Bishkek, Kyrgyzstan and also a fellow at the Philadephia-based Foreign Policy Research Institute co-authored a rebuttal with Tristan Kenderdine, research director at the Kazakh-based political risk consultancy Future Risks, which tracks Chinese engagement in Eurasia, that was published over the weekend on The Diplomat (see below for key highlights). 

Yau took to Twitter today to outline her objections to BU’s data collection methodology in a five-part thread:

Boston University dataset estimates China’s total lending to Central Asia at $19.3 billion for 2008-2019; but it is at least $41 billion, according to my unpublished database. @futurerisks and I explained more in this article.

BU’s dataset took a geospatial approach focusing on biodiversity and indigenous lands. Loans without a location are omitted. This means ignoring multimillion-dollar loans issued for non-greenfield investments, such as China’s 2010 $10 billion loan to Kazakhstan’s SWF.

BU’s approach also failed to capture the trend that Chinese policy banks are loaning directly to Chinese SOEs who are conducting Belt and Road projects.

More importantly, Chinese banks have gone global in the past few years, thus loans no longer confined to bilateral agreements. CDB and BOC in Kazakhstan for example provide many loans locally without going through Beijing.

Key Highlights From Yau & Kenderdine’s Column About How “China’s Policy Banks Are Lending Differently, Not Less”

  • BU’S “FALLIBLE” DATASET: “Kazakhstan is a good example of why relying on [the BU] dataset as an exhaustive list of China policy loan books is fallible. The Boston University dataset lists only six projects in Kazakhstan from 2008 to 2019, totaling $5.7 billion. But the list of joint projects under the latest China-Kazakhstan bilateral agreement alone is 56 projects, totaling $24.52 billion.”
  • LOOK BEYOND BILATERAL LOANS: “China is now shifting policy bank lending down the public finance hierarchy to more intra-country loans and more loans to SOEs… Analyses of Belt and Road public finance tend to measure only bilateral deals that develop new infrastructure. However, China’s wider underlying banking system in Belt and Road economies is fundamentally policy-driven, centrally coordinated, and targeted toward developing China’s offshore production system. This is still very much policy lending, not commercial lending.”

In turn, Kevin P. Gallagher and Rebecca Ray BU’s Global Policy Development Center published a blog post on Sunday that attempted to clear up some of the confusion over what information is included in the dataset:

WHAT DOES IT TRACK?: “The database tracks all overseas loan commitments to governments and state-owned entities from China’s two main policy banks operating abroad – the China Development Bank (CDB) and the Export-Import Bank of China (Eximbank) – to governments, government-owned banks, and funds, and state-owned enterprises, from 2008 through 2019.”

HOW MANY AND WHAT KIND OF LOANS ARE INCLUDED?: “The database includes 858 projects: 615 with specific geographic footprints and 243 that do not have footprints.”

WHAT DOESN’T IT TRACK?: “The database does not track China’s state-owned commercial bank activity or services exports through supplier credits.”

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