CONGRESSMAN JIM HIMES

Representing the 4th District of Connecticut

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Himes Chairs Hearing on Chinese Lending Practices

May 18, 2021
Press Release

Washington, DC—Today, Congressman Jim Himes (CT-04) chaired a hearing by the National Security, International Development, and Monetary Policy Subcommittee of the House Committee on Financial Services entitled “Examining Belt and Road: The Lending Practices of the People's Republic of China and Impact on the International Debt Architecture."

Even before the coronavirus besieged the world, there were worrying signs of sovereign debt distress in developing countries. And much of that debt is owed to China.  Over the last 20 years, China has become the single largest official lender to developing countries, dwarfing the World Bank, IMF, and the countries that make up the Paris Club. Exactly how large a lender China is, however, remains unknown because the country does not publicly disclose its foreign lending. In addition, very little about the specific terms of Chinese loans had previously been made public.

Given the lack of clarity around exactly how much is owed to Chinese entities and the terms of those agreements, other lenders face uncertainty about their level of seniority and the full extent of the borrowing countries’ debt servicing costs. This lack of transparency makes future debt restructuring efforts more difficult. The Debt Services Suspension Initiative and the Common Framework are both positive developments in ensuring international cooperation in addressing sovereign debt issues. Most notably, the Common Framework brings China closer to agreeing to Paris Club-style coordination. However, there remain significant hurdles to putting developing countries on a sustainable debt path.

“The extent and details of Chinese international lending have been very opaque,” said Himes.  “We know that it has enormous implications for the future solvency of many developing nations as well as serious impacts on national and global security. Today’s hearing is meant to highlight the challenges Chinese lending practices create while contemplating how to reform the international debt architecture and set durable global norms for sovereign lending.” 

Witnesses at today’s hearing included:

  • Professor Anna Gelpern, Anne Fleming Research Professor at Georgetown Law and nonresident senior fellow at the Peter G. Peterson Institute for International Economics
  • Mr. Scott Morris, Senior Fellow, Center for Global Development
  • Professor Odette Lienau, Professor of Law, Associate Dean for Faculty Research and Intellectual Life, Cornell University Law School
  • Mr. Jaime Atienza, Debt Policy Lead, Oxfam
  • Dr. Sebastian Horn, Economist, Kiel Institute for the World Economy

For more information, contact Patrick Malone at Patrick.malone@mail.house.gov.

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