China got itself into trouble a few times when lenders who got into problems paying back debts. When China offers the same loans commercial banks can offer but without political ties, China has not so much extra to give, says strategic analyst Harry Broadman about the country’s’ international debt policies in the Africa Report, taking Zambia as an example.
The Africa Report:
The Zambian experience shows that China’s lending strategy needs to change, says Harry Broadman, chair of the emerging markets practice at Berkeley Research Group LLC in Washington. He questions why a borrower such as Zambia would not go to a commercial bank – which would have no ulterior political motives – if the loans are made at commercial rates.
“If China wants to remain in the international creditor game—where by dint of its political structure it is not a commercial-based economy and its motives as a lender are far more than only commercial—it needs to make itself attractive in other ways to debtors if it wants to charge commercial rates,” Broadman says.
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