The governments of developing countries like Kyrgyzstan and Tajikistan owe China far more than previously realized, likely more than they realize. Eurasianet reports with reference to a report «China’s Overseas Lending » published by the National Bureau of Economic Research (NBER).
About half of all Chinese loans are hidden from public scrutiny because of Beijing’s opaque accounting systems.
Globally, in the decade to 2016, these shadowy funds totaled some $200 billion.
«The documentation of China’s capital exports is, at best, opaque. China does not report on its official lending and there is no comprehensive standardized data on Chinese overseas debt stocks and flows. Documentation of China’s overseas lending literally falls through the cracks,» authors of the paper write.
As a result, the debtor countries themselves have an incomplete picture on how much they have borrowed from China and under what conditions.
The report ranks countries most indebted to China. Kyrgyzstan takes the 5th place globally, Tajikistan — 20, Turkmenistan — 23, and Uzbekistan — 40. It is noted that estimates of debt underestimated due to opacity, which creates certain risks.
According authors of the paper, for a recipient country that doesn’t know what it owes, it’s hard to plan to service these debts. The unpredictability is compounded by the fact that China often lends at commercial rates (more than half of loans in 2000-2017) and in dollars (85 percent of those loans). Countries with a weakening currency will struggle to service a loan denominated in dollars. The Tajik somoni lost over 76 percent of its value in this period, the Kyrgyz som — 32 percent.