China has lent more money to other developing countries over the past two years than the World Bank, a stark indication of the scale of Beijing's economic reach and its drive to secure natural resources.
China Development Bank and China Export-Import Bank signed loans of at least $110bn (£70bn) to other developing country governments and companies in 2009 and 2010, according to Financial Times research. The equivalent arms of the World Bank made loan commitments of $100.3bn from mid-2008 to mid-2010, itself a record amount of lending in response to the financial crisis.
The volume of overseas loans by the two banks indicates how Beijing is forging new patterns of China-led globalisation, as part of a broader push to scale back its economic dependency on western export markets.
The financial crisis allowed Beijing to push the commercial interests of its energy companies by offering loans to producer countries at a time when financing was hard to come by.
The agreements include large loan-for-oil deals with Russia, Venezuela and Brazil, as well as loans for an Indian company to buy power equipment and for infrastructure projects in Ghana and railways in Argentina.
The World Bank has been trying to find ways to co-operate with Beijing to avoid escalating competition over loan deals. China itself has been one of the biggest recipients of World Bank loans in the past."One of the topics I have been discussing with the Chinese authorities is how we can work with them to share our mutual experience to support other developing countries, whether in south-east Asia or Africa," Robert Zoellick, World Bank president, said on a visit to China last year.
CDB and EximBank provide more preferential terms than the World Bank and other lenders for certain deals that are strongly supported by Beijing, but offer terms that are closer to international standards for less politically sensitive deals. They also tend to impose less onerous transparency conditions.
The flurry of Chinese lending to oil producers has already caused some anxiety in the US about energy security. According to Erica Downs, a China expert at the Brookings Institution, the impact on US interests is mixed. "CDB's [energy] loans indicate that Chinese lenders are likely to be more concerned about good economic policymaking in recipient countries and they are not reducing the amount of oil available to the US," she said. "On the other hand, CDB's loans are empowering anti-American regimes in Latin America."
CDB and China EximBank do not publish figures for overseas loans. They declined to comment. The World Bank said it was working closely with China and welcomed "an important and growing partnership".
The statistics were collected by examining public announcements by the banks, the borrowers or the Chinese government.
An adviser to CDB said the volume of lending suggested by public statements understated the real level of the bank's new loan commitments to developing countries.
The World Bank figures are for the International Bank of Reconstruction and Development, the bank's main lending arm, and the International Finance Corporation, which lends to the private sector. They do not include the International Development Association, which makes grants and low-interest loans. China also gives financial aid to other developing countries, but provides little detail.
Beijing has also used offshore lending by CDB and EximBank, which have a mandate to further the interests of the Communist Party and the Chinese state, to accelerate its goal of making its currency more international. For example, half of the $20bn loan it extended to Venezuela was denominated in renminbi and intended for purchases of Chinese goods and equipment. In other cases, the foreign currency in the loans has come directly from China's foreign exchange reserves. (CNN)
china will over come world bank very soon... word bank face bankruptcy ......?
keshan Wednesday, 19 January 2011 05:40 AM
china at-least does not impose western oriented narrow mined demands like the World bank does to third world nations and has no major capitalist double edge policies towards us.Finally the Dragon has Risen
renganthan Wednesday, 19 January 2011 06:06 AM
Long live our Masters!
Faqi Wednesday, 19 January 2011 06:24 AM
This is not AID but LOANS which have to be paid back with interest. The word partnership is incorrectly used here. We become a debtor Nation. China has a hold on the countries that are indebted to them to give them the first refusal for raw materials. The Chinese are wise traders. They are not giving loans because they love us.
Local man Wednesday, 19 January 2011 06:33 AM
OH REALLY.. POOR USA SYMPATHISERS.. theyr'e shocked with the rise of the eastern nations..
AJ - DXB Wednesday, 19 January 2011 07:10 AM
China has gone through hard times since Nixon's and Regans' times facing many embargos labeling China as Maoists (COMMUNIST). China had stood the trial of Democracy and had proven that the US and it’s allies’ cannot affect nations that strives against all odds. Similarly time has witnessed India following the same route and so will Iran.
Tom Pachaya Wednesday, 19 January 2011 07:37 AM
Hey man, Read the News. It is not talking about Sri Lankan bank. It is a news about Chinese bank. So no point of blaming Sri Lanka. May be it hurts to live in a decaying empire and to see another empire is rising. ;)
Ane Manda Wednesday, 19 January 2011 08:46 AM
AJ - DXB, Spot on. Thanks.
lalith deshapriya Wednesday, 19 January 2011 08:44 AM
when china become super power US become supper poore.
Konde bendapu china Tuesday, 18 January 2011 04:02 PM
Congratulations on beating World Bank records
Pawlpakse Wednesday, 19 January 2011 09:19 AM
This not healthy and China's growth is not sustainable. The bubble is gonna burst very soon...
ampare son Tuesday, 18 January 2011 04:40 PM
after couple decade china going to most english speaking country in the world. lot of chinese midlle class family kids go U.S.A, canada, australia for higher education.
Citizen Tuesday, 18 January 2011 05:11 PM
Whoever get loans from WB or China or other countries will be in trouble until they settle it.
zorro Wednesday, 19 January 2011 09:56 AM
thank to us as we are on the receiving end. If we do not need your money very desperately you wont reach this position.
Afker Tuesday, 18 January 2011 05:20 PM
at least the West wont be able to dictate foreign policy with there falling fortunes in lending
Tom Sam USA Tuesday, 18 January 2011 06:16 PM
sinking lanka the leading pariah nation and beggers of the world(except pakse mafia).
padmini Tuesday, 18 January 2011 06:29 PM
Well done China. As a Sri Lankan we wish your success.
Faqi Tuesday, 18 January 2011 07:56 PM
The words are LENT and not given and THE DRIEVE TO SECURE NATURAL RESOURCES, There is an ulterior motive.
Not To Worry Wednesday, 19 January 2011 12:50 AM
If China gives, take it. Worry when the Chinese try to take it back.
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