The average government is underreporting its actual and potential repayment obligations to China by an amount that is equivalent to 5.8% of its GDP, according to AidData. Instead, China is making loans to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries. Most of them benefit from explicit or implicit forms of host government liability protection, the report said. A typical loan from China has a 4.2% interest rate and a repayment period of less than 10 years, compared to the typical 1.1% interest rate and 28-year repayment period from a lender like Germany, France or Japan, the report said.
The report, focusing on China’s Belt and Road Initiative, covers projects approved between 2000 and 2017 and implemented between 2000 and 2021.