Chinese external lending has long been shrouded in secrecy. Around 50% of Chinese loans are considered ‘hidden debt’ and deducing global totals has been a long-term task for academics. China’s intent with these loans has been much debated. Is the country simply doing business, or is this an elaborate debt trap, luring in governments with easy cash while planning to seize strategic assets when they eventually hit hard times? It is no small question. Data from the Kiel Institute shows China lending more than the World Bank or the IMF. The Belt and Road Initiative is the greatest outflow of financing since the Marshall Plan.

That is where the comparison ends though. 90% of American Marshall plan funding was provided as grants. Chinese money comes as loans, sometimes backed by strategic assets as collateral. It’s certainly true that “BRI loans are not foreign aid” as a candid researcher at the Chinese Development Bank told the FT last month. Despite talk of preferential rates, Chinese debt is frequently lent at market interest with short maturities. And the collateral isn’t just for show; when Sri Lanka couldn’t pay its debts in 2017, China acquired the strategic port at Hambantota. 

There is, however, evidence the other way as well; most debt crises don’t end up with ports changing hands. Indeed, some research has pointed to forgiveness, deferment and restructuring as more common outcomes. With Beijing trying to build its reputation for global leadership, strong-arming strategic assets from indebted governments facing the repercussions of a global health crisis would be counterproductive. Yet with eyes on China any reward for forbearance could be deferred, particularly as these loans have short maturities. There are always licenses to grant and assets to privatise. With governments under economic strain, those of us watching the story of Chinese debt are about to get a lot of new data points.