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Introduction

Given an absence of transparency, and in order to better understand Chinese export finance activity EXIM, adopted a two-pronged approach to capturing information on lending by Chinese export credit agencies.  First, as in previous years, EXIM utilized official figures published by China Eximbank and Sinosure to estimate export credit volumes from 2008 to 2013. This year data from this period was sourced from an OECD report on Chinese export credit programs and activity.1   Secondly, to capture data for 2014, EXIM utilized a series of Lexis Nexis searches to create a database of press-reported articles describing Chinese financing abroad.  This database swept through every country in the world and captured articles on China Eximbank, Sinosure, China Development Bank, and unspecified official financing from the Chinese government.  In an effort to be as accurate and conservative as possible, only information from China Eximbank and Sinosure were reported as export credits and only a small portion of the articles identifying China Eximbank activity were included in the competitiveness report.  EXIM chose to focus on China Eximbank’s buyer and seller credit programs in its reporting among China Eximbank’s many lending programs.  Consequently, within the press database, EXIM attempted to select projects from the database that would correspond with projects funded through China Eximbank’s buyer credit program. Seller credits were deemed unlikely to be captured by the press and thus estimated for 2014 from 2013 numbers.  This resulted in a very conservative estimate of Chinese activity that excluded many projects funded by China Eximbank captured through the press database.   For example, while the press database identified 52 reported projects from China Eximbank worth roughly $56 billion, EXIM only selected 17 projects totaling $7 billion as likely funded by China Eximbank’s buyer credit program.  This combined with an estimated $25 billion for China Eximbank’s seller credit based on official numbers from 2013 resulted in a reported total of $32 billion for China Eximbank—significantly less than the total value of China Eximbank projects identified in the press database.  Moreover, only projects linked to China Eximbank were reported from the press database.  Many projects linked to other Chinese institutions or the Chinese government generally were excluded.

Overall, EXIM’s estimate for Chinese export finance is very conservative.  It focuses solely on China’s official export credit agencies—Sinosure and China Eximbank—excluding several reported projects linked to Chinese suppliers funded by other Chinese institutions such as the China Development Bank.  Furthermore, within China Eximbank, EXIM reported only two programs as official export credit—the buyer and seller credit program, further excluding many programs such as its tied concessional loan programs.  EXIM’s figure of $58 billion for Chinese standard export credits in 2014 should be regarded as a lower bound, from which one could build a number much higher with less conservative metrics.  Further information on how EXIM generated its press database and constructed its estimates are available upon request.

Concessional Lending

To capture Chinese concessional lending for 2014, EXIM analyzed its press database for projects that were reported as concessional or could be assumed to be so.  EXIM limited this search to projects funded by China Eximbank.  By law, China Eximbank’s concessional programs require funded projects to source from Chinese companies.  A project was reported as concessional if it met one of the three following criteria:

  • If the article reported the interest rate as being concessional, preferential, interest-free, below commercial rates, or if the loan contained a grant element,
  • If the buyer was a public entity in a country with mandatory concessional lending levels established by the IMF, or
  • If the loan was explicitly stated to be part of an aid package or for a project that was clearly not commercially viable at privately available rates.

In most cases, loans were marked as concessional under the first and second criteria.  In all, EXIM found 12 concessional projects funded by China Eximbank worth nearly $13 billion.  A further 11 concessional projects worth more than $2 billion were also identified in the press database but could not be linked to China Eximbank.


1http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/ECG%282015%293&doclanguage=en