Different countries owe at least USD 385 billion amount of debt to China which has slipped through scrutiny of international lenders such as the World Bank and the International Monetary Fund (IMF).
The "hidden debt" is due to an increasing number of deals struck not directly between governments through central banks but through often opaque arrangements with a range of financing institutions, hence "the debt burdens were kept off the public balance sheets," Radio Free Asia reported citing a four-year study by AidData.
"Chinese debt burdens are substantially larger than research institutions, credit rating agencies, or intergovernmental organizations with surveillance responsibilities previously understood," the study said.
The study also added that nearly 70 per cent of China's overseas lending "is now directed to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries" rather than sovereign borrowers which are central government institutions, Radio Free Asia reported.
Meanwhile, China is also using confidentiality clauses barring borrowers from revealing terms and conditions of the engagement or even the existence of the debt itself.
International Forum for Right and Security (IFFRAS), reported that recent joint research by the Peterson Institute for International Economics, Kiel Institute for the World Economy and the Centre for Global Development & Aid Data concluded that it uses these contracts to debt-trap the borrowing nations.
( With inputs from ANI )
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