Countries Have $385 Billion In ‘Hidden Debts’ To China, Study Finds

A new study found under-reported debts of at least $385 billion owed by different countries to China in the past two decades, and that one-third of projects under the Belt and Road Initiative have run into major implementation problems.The hidden debts, which slipped through the scrutiny of international lenders such as the World Bank and the International Monetary Fund (IMF), and credit rating agencies, mean borrowing countries may have to repay more than they think.

The findings are from a four-year study by AidData, an international development research lab based at William & Mary’s Global Research Institute in the United States. “Chinese debt burdens are substantially larger than research institutions, credit rating agencies, or intergovernmental organizations with surveillance responsibilities previously understood,” the study said. The reason is an increasing number of deals struck not directly between governments through central banks but through often opaque arrangements with a range of financing institutions, hence “the debt burdens were kept off the public balance sheets.”

The study said that nearly 70 percent of China’s overseas lending “is now directed to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries” rather than sovereign borrowers which are central government institutions.

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