A new report provides an unprecedented view into Chinese loan contracts with dozens of governments throughout the Global South. Researchers from AidData, the Kiel Institute, and the Center for Global Development analyzed 100 contracts between Chinese state-owned entities and government borrowers in 24 countries and then compared the terms of those contracts with those of other bilateral, multilateral and commercial creditors.
China’s lending practices are notoriously opaque and until now very few people other than key principals involved in the actual loans have had the opportunity to review these contracts in detail so as to better understand the specific legal terms and how they’re structured.
What the research team discovered is that China is “a muscular and commercially-savvy lender” who employs contract terms that are in many ways quite similar to those of other international creditors. However, they did note a number of key differences that highlight how China structures its debt deals in such a way that are not “win-win” and put borrowers at a considerable disadvantage.
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