US faults China over opaque overseas lending, warns of emerging-market debt risks

US State Department introduces tougher disclosure requirement covering sovereign loans, liabilities and collateral

“China’s lack of transparency related to its foreign claims – including loans and other obligations held by state-owned and private commercial banks and state-owned enterprises – obscures the scale and terms of many sovereign liabilities,” the report said.

The lack of disclosure undermined accurate risk assessments and increased “the likelihood of unexpected defaults or debt restructuring in emerging markets”, it added.

The warning came as the department added a requirement that governments make public the terms and conditions of sovereign loans provided to foreign borrowers, including liabilities and collateralised assets.