Journal Article

Debt Distress on China’s Belt and Road

Date Published

May 30, 2023


Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart, Christoph Trebesch


AEA Papers & Proceedings


Horn, Sebastian, Bradley C. Parks, Carmen M. Reinhart, and Christoph Trebesch. 2023. "Debt Distress on China's Belt and Road." AEA Papers and Proceedings, 113: 131-34.


This paper shows that China's lending boom to developing country sovereigns has largely ended and that debt distress and defaults are increasingly common. Chinese lenders react to this challenge through two main coping strategies: first, bilateral sovereign debt restructurings—typically with maturity extensions but no face value cuts—and, second, rescue loans that allow debtors to avoid or delay default. Low-income countries tend to receive debt restructurings, whereas emerging market countries are more likely to receive rescue loans. We speculate that the differential crisis response is due to the different exposure levels of Chinese state banks.

This paper draws upon the China as an International Lender of Last Resort Dataset, Version 1.0.

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Bradley C. Parks

Bradley C. Parks

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