China Takes the Lead in Development Finance
China has provided many developing countries the additional resources they had long sought from the West. If Chinese lenders align this funding with efforts to ensure financial and environmental sustainability, the world would stand a much better chance of achieving a green and inclusive recovery from the COVID-19 crisis.
BOSTON – According to new estimates, China now finances overseas development at nearly the same level as the World Bank. With countries currently struggling to combat COVID-19, protect the vulnerable, and mount a green and inclusive recovery, this significant increase in global development funding could potentially bring major benefits to the world economy.
But, like any huge influx of capital into the developing world, China’s financial assistance also poses large risks – especially regarding debt distress, biodiversity loss, and climate change.
A new interactive dataset from Boston University’s Global Development Policy Center tracks the overseas sovereign loan commitments of China’s two global policy banks – China Development Bank and the Export-Import Bank of China. Between 2008 and 2019, China’s global development finance totaled $462 billion, just $5 billion short of the World Bank’s sovereign commitments in the same period.