Friday, April 30, 2021

Follow-up: Inside The Secretive World Of Chinese Foreign Infrastructure Loans

A sweet catch by Claire Jones who, in addition to her FT Alphaville duties is heading up the FT vertical "Trade Secrets", global trade, supply chains, our kind of stuff. Via today's FTAV Further Reading post,

From Klement on Investing, April 28:

Why isn’t this a bigger bombshell?

I have recently been interviewed for the CFA Institute’s Enterprising Investor blog on the geopolitical trends for the coming years. I mentioned that the rise of China is one of three major geopolitical trends that will have a significant influence. No surprise there but I also said that most investors aren’t aware how influential China already is and how much the country works behind the scenes and under the surface to further its interests. Not even 24 hours after I finished the interview, a report by a group of researchers from Georgetown University, the Kiel Institute for the World Economy, and the Center for Global Development at William and Mary University landed on my desk. 

These guys were able to get a hold of 100 lending contracts between Chinese government entities or state-owned lenders and 24 developing countries around the world. Even though these contracts cover only 5% of the estimated total lending of China between 2000 and 2017, it provides some important insights into the implementation of the Belt and Road Initiative and how China uses money as a tool to increase its political influence.

First, it is interesting that the Chinese loans are far more focused on the energy, transport, and telecom sectors than the global average. This is no surprise since the Belt and Road Initiative is an infrastructure project, but it is nevertheless interesting to note that lending in “social infrastructure” like healthcare or education is almost never done by Chinese entities....


We happened to catch the Reuters blurb on the report in March 31's "Database reveals secrets of China's loans to developing nations, says study" which we outro'd with:

That's wonderful research but I'm still curious about the 12+ port deals China has done in Europe and whether those deals contain any secret protocols or annexes.

I will probably be dipping into the report this weekend or next but if you can't wait:

"How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments" (85 page PDF)