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The Diplomat: Does China Weaponize Lending?

July 1, 2021

From the article:

How does China weaponize the lending of money to the developing world? A recent study from the team of Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, and Christoph Trebesch investigated a sample of China’s overseas lending contracts, finding that Beijing has a standardized approach to lending that sets it apart from other major creditors. The study sought to find concrete evidence to help discern whether or not Chinese lending is characterized by mechanisms that enable Beijing to squeeze debtor countries, or at least squeeze them beyond the international standard for such coercion. What many have guessed about Chinese lending appears to be true: China has built-in coercive mechanisms in its loan contracts that enable Beijing to apply a wave of different coercive effects on recalcitrant debtors. 

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Director of the US Development Policy Initiative, Co-Director of Sustainable Development Finance, and Senior Fellow