China Eximbank's "Two Concessional Facilities": Current status and issues (Japanese)

Naohiro Kitano and Yumiko Miyabayashi

Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: The Export-Import Bank of China's government concessional loan (GCL) and preferential buyer's credit (PBC) are known as the "Two Concessional Facilities." GCL and PBC are presented as the main schemes in the Chinese government's development and economic cooperation initiatives, to strengthen political, diplomatic, and economic relations with developing countries, and to support Chinese companies' entry into developing country infrastructure markets. This study utilizes the GCL/PBC database (2000-2020), which the authors have been working on since 2018, to analyze its current status and examine the challenges it faces as a policy tool. The value of GCL/PBC commitments increased rapidly from around 2006, peaked in 2014, and has been declining since 2018 against the backdrop of debt problems, with a sharp drop in 2020. By region, Asia and Africa are the largest recipients, with a shift from Southeast Asia to South Asia seen since the 2010s. By sector, transportation and electricity account for a large share, while telecommunications represents another major sector in Africa and the Pacific. Among the major GCL/PBC borrowing countries, there are notable examples of countries with high risk and debt distress. The Chinese government's response to the debt problem is an urgent issue, and the future direction may be to improve the GCL/PBC facilities.

Pages: 22 pages
Date: 2023-07
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