Ideas to Action:

Independent research for global prosperity

CGD Policy Blogs

 

Map of Chinese lending projects around the world, concentrated in Europe, Asia, and Africa

The Problem Isn’t that Chinese Lending Is Too Big, It’s that the US and Europe’s Is Too Small

As the possibility of a new Cold War between the US and China gains traction in some foreign policy circles, the scale of Chinese development finance has taken center stage. A closer examination suggests the cost to China of this lending is distinctly underwhelming. It would be cheap for the US and Europe to match China’s lending numbers –and in the interest of global development if it was done right.

A construction worker at an unfinished building in China. Curt Carnemark, World Bank photo.

With a Debt Crisis Looming, Researchers Who Estimated China’s “Hidden” Lending Respond to Their Critics

Last year, economists Sebastian Horn, Carmen Reinhart, and Christoph Trebesch put forward estimates of the Chinese government’s external (“overseas”) lending in a working paper. Their work was a landmark effort in a number of respects. Perhaps not surprisingly for a working paper, Horn et al. also attracted critics. In a new note for CGD, Horn et al. respond to this criticism.

A stock photo of a see-through piggy bank. Adobe Stock.

A Reckoning for China’s Opaque Overseas Lending

We are so accustomed to the Chinese government’s lack of transparency that the opaqueness of China’s overseas loans seems unremarkable at this point. But as we face what inevitably looks like a global debt crisis, one that is likely to hit low-income countries particularly hard, a clear accounting of the scale of the problem is critical.