ABSTRACT How do Chinese banks secure their loans to governments and public enterprises in the Global South? How do Chinese practices compare with those of other commercial and official creditors? We find that Chinese creditors rarely secure their overseas loans with real property, but primarily utilize liquid assets in escrow accounts that operate as payment mechanisms. Chinese practices represent a hybrid ‘belt and suspenders’ approach to lending to countries where neither the belt (government) nor the suspenders (collateral) are considered fully reliable. Our review suggests strong historical parallels between Chinese official and commercial creditors and analogous lenders in Japan and the West, bringing into question the uniqueness of China as a creditor.
Bräutigam et al. (Thu,) studied this question.