China places tough conditions on its debtors for the loans

China is now the largest public donor to developing countries, but according to a study, it places tough conditions on its debtors for the loans. The Kiel Institute for the World Economy (IfW), together with several US research institutions, examined 100 Chinese loan agreements with 24 countries. The financing state banks used their "bargaining power to their advantage" and "deliberately positioned themselves as priority creditors," according to one result. Many of the contracts are part of the so-called "Belt and Road Initiative". For some years now, China has been pushing huge infrastructure projects in numerous countries for this "New Silk Road". The People's Republic is pumping billions into a network of new ports, railway lines, roads and industrial parks in Asia, Africa and Europe. According to the study, China's contracts contain "unusually far-reaching confidentiality clauses," and sometimes even the existence of the loans themselves is secret. This means that the contracts are "non-transparent" for taxpayers who ultimately have to pay for the repayment. In addition, other lenders could not reliably assess the creditworthiness of a country in this way. According to the experts, the contracts also give Chinese state banks priority over other creditors. Many borrowers had to keep large cash balances in an account, which Chinese banks can confiscate in the event of a default. In most cases, the debtors are therefore prohibited from restructuring their debts with other creditors, for example through the so-called Paris Club. Debt relief is therefore at Beijing's discretion.