Analysts Agatha Kratz and Matthew Mingey from the China-focused research firm Rhodium Group challenged the findings of a controversial dataset produced by Boston University’s Global Policy Development Center. While Kratz and Mingey agree that lending by China’s two major policy banks, the China Development Bank and the China Exim Bank, has decreased in recent years, they don’t believe it’s anywhere near as much as what BU contends.
According to the BU data, lending by these two policy banks plummeted from $75 billion in 2016 to just $4 billion in 2019.
“We suspect the 2019 slowdown was not as dramatic as the BU numbers indicate,” said the Rhodium Group analysts.
Key Highlights From Rhodium Group’s Response to the BU Dataset
- METHODOLOGY: “The BU authors make structural and methodological choices that may leave observers with a distorted view of China’s outbound lending and exaggerate the drop in China’s loans. First, the BU dataset excludes loans from China’s commercial banks, which are increasingly active players in China’s cross-border finance. The BU team is clear about this decision, arguing that because policy banks work as “first movers” to unlock later commercial participation, they are the most important lenders to governments and SOEs. Accordingly, they say their data is intended only to describe China’s lending to governments, not to serve as a “sole barometer” for the broader BRI.”
- PARTIAL DATA: “Beyond the decision to filter out commercial bank loans, there are structural reasons to believe the BU dataset may underestimate China’s overseas lending activity in 2019… It is common for information to be publicly disclosed only years after an initial loan commitment, in subsequent reports, government audits or budget documents, by other researchers and databases, or after projects have already been constructed. Other researchers have tended to report numbers only after a multi-year lag, avoiding the minefield of partial data.”
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