China’s loans to rest of the world worth US$5 trillion, 6 per cent of global economy, new study reveals
- The world’s debt to China grew tenfold between 2000 and 2017, from US$500 billion to US$5 trillion, with 80 per cent of emerging nations receiving Chinese funds
- Kiel Institute estimates that 50 per cent of Chinese overseas funding is outside data captured by World Bank and IMF, raising concerns over transparency
The world’s debt to China grew tenfold between 2000 and 2017, according to new estimates from a German think tank, at a time when there are growing concerns about Beijing’s influence over global finance.
As of 2018, the world owed more than US$5 trillion worth of debt to the government of China, or around 6 per cent of global economic output, according to a report published by the Kiel Institute for the World Economy last week.
This is a huge increase from the US$500 billion owed in the early 2000s, which was around 1 per cent of global economic output.
Analysts have long argued that China has not been consistently transparent with its lending to foreign countries, in particular, low income countries with little economic clout.
The nature of Chinese overseas lending means that many loans are outside the international banking system. While 85 per cent are denominated in US dollars, the loans are often issued by Chinese banks to Chinese contractors overseas to avoid direct loan disbursement to debtor country governments, which are considered to have high default risks.