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The real risk of owing money to China

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Brian Adam
Professional Blogger, V logger, traveler and explorer of new horizons.
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Typically requires that if borrowers take action deemed adverse to any Chinese entity, a default is triggered

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China is sabotaging international credit cooperation, but not in the way that is often feared. An AidData analysis of 100 of its loans to poor countries over the past two decades undermines the arguments that it traps them in so-called debt traps: it has not applied abusive rates or demanded strategic assets, such as ports, as collateral. But while the sample reflects less than 5% of the $ 900 billion of credit it has extended to developing countries, the fine print in the contracts reinforces fears.

75% of the loans examined were excluded from restructuring agreements with the Paris Club group of lenders from developed economies. The China Development Bank often requires that if borrowers take action deemed adverse to any Chinese entity, a default be triggered. For rich nations, the findings end up raising as many trust problems as they solve.

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