IfW in the News

The World's Bank Vast Chinese Loans Pose Risks to Developing World

04.07.2019

According to a study by Christoph Trebesch, China's lending rate is much higher than previously known.

Excerpt from the Article

(...) On the contrary: The data shows that many countries in the poorer regions of the world have accepted far more credit from China than previously known. And the loans frequently come with onerous conditions that are strongly oriented toward Beijing's strategic interests and increase the risk that many countries in the developing world could plunge into financial crisis. "The West still hasn't understood how profoundly China's rise has changed the international financial system," says Christoph Trebesch, a co-author of the study from the Kiel Institute for the World Economy.

Sitting in a library in Hamburg, Trebesch scrolls through hundreds of lines of data on his laptop: loan periods, interest rates, intended purposes and collateral on almost 5,000 Chinese loans and aid payments to 152 countries. The information comes from almost a dozen databases that were compiled with the help of aid organizations, banks and the CIA.

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