Powerpoint presentation by Paola Subacchi, Global Policy Institute, QMUL and University of Bologna, 21 May 2021

1. The new silk road
Paola Subacchi
Global Policy Institute, QMUL and University of Bologna
21 May 2021

2. 2
The debt burden: government debt as % of GDP
Source: Morris, Parks and Gardner, 2020, p. 18

3. 3
Official Chinese policies on lending terms (1)
• China’s Ministry of Commerce (MOFCOM) via “Economic and Technical Cooperation
Agreements”: No-Interest Loans
- rmb-denominated loans, 20-yr maturities, 10-yr grace periods, 0% int rates
- no counterpart funding required, possibility of debt forgiving or restructuring
• China Eximbank: concessional loans
- rmb-denominated loans, 20-yr maturities, 5-yr grace periods, 2% int rates (below market rates)
- no counterpart funding required
• China Eximbank: preferential Export Buyer’s Credits
- USD-denominated loans, various conditions, fixed int rates (below market rates)
- no counterpart funding required
- granted to government institutions that wish to buy Chinese exports

4. 4
Official Chinese policies on lending terms (2)
• Non-concessional and semi-concessional loans from China Development Bank (CDB) and
Chinese state-owned commercial banks (Bank of China, Industrial and Commercial Bank of
China, China Construction Bank, and Agricultural Bank of China)
- generally provided on less concessional terms because, unlike China Eximbank, these banks must
maintain their own balance sheets and lend without receiving official subsidies from the state
- base interest rates set to the (floating) LIBOR rate (in the 4.5% to 6% range)
- maturities and grace periods can vary widely
- usually denominated in USD or EUR
- granted to both government agencies and companies

5. 5
China’s outstanding overseas debt claims
Source: Horn, Reinhart, Trebesch, 2019

6. 6
Debt exposure to China, selected countries, 2014-2019
• Between 2014 and 2019, Djibouti,
Republic of Congo and Angola
significantly increased their debt
exposure to China
• Djibouti: from 7.7% to 34.6% of GDP
0
1000
2000
3000
4000
5000
6000
7000
8000
2014 2019

7. 7
China’s % of total external debt stocks in Asia, 2019
0 10 20 30 40 50
Maldives
Laos
Myanmar
Cambodia
Pakistan
Bangladesh
Nepal
Source: World Bank International Debt Statistics Database

8. 8
Renegotiations of Chinese debt, January 2001 to
November 2020
• Renegotiations of Chinese debt
are increasing
• The Coivid-19 crisis has
accelerated this trend
Source: Rhodium Group in https://www.cfr.org/report/chinas-belt-and-road-implications-for-the-united-states/findings

9. 9
Renegotiated debt by outcome, January 2001 to
November 2020
• China rarely cancels debt
Source: Rhodium Group in https://www.cfr.org/report/chinas-belt-and-road-implications-for-the-united-states/findings

10. Thank you