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house Bill H.R. 5932

Should the U.S. Push for Greater Transparency About Loans China Makes to Smaller Nations at Int’l Financial Institutions?

Argument in favor

A lack of transparency surrounding the amount of loans made by China to debtor nations around the world and the terms of those loans threatens the stability of the financial system and the independence of debtor nations. This bill would ensure the U.S. uses its voice and vote at international financial institutions to encourage greater transparency about Chinese loans.

Leslie's Opinion
···
03/02/2020
We should push for financial transparency in loans across the board! Not only China but Russia that has underwritten Trump Deutsch Bank Loans. Thank you Jamie Raskin for voting, “Yea”!
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Dave's Opinion
···
03/02/2020
The Ensuring Chinese Debt Transparency Act of 2020, yes, we could start with Trump and Trump’s family, then Russia and Saudi Arabia. Which most likely his taxes would show anyway.
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KevinX's Opinion
···
03/02/2020
These loans are a part of Chinese plan called the Slik and Belt Loans. The idea is to give a road into financial domination of underdeveloped or they pay off the loan and turn out fine-unlikely because even Moody’s wouldn’t give them a loan.
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Argument opposed

While it may be bipartisan, this bill is unlikely to succeed in getting China to be more transparent about its loans to debtor nations around the world unless or until China chooses to make that information available. As a result, Congress shouldn’t waste its time by trying to advance policies to promote more transparency by China.

jimK's Opinion
···
03/02/2020
When our Country once again leads by our example, this should be revisited. Transparency is always a good practice which in financial markets does put all of the players on common ground and tends to assure an equitable basis for lenders and borrowers alike. When we can demonstrate this transparency to our world partners by our country’s own actions- then we have a basis for insisting that they ‘play fair’ as well. Demanding others play fair while stacking the deck in your favor is fundamentally dishonest (like trumpublicans stacking the deck of court appointees and then claiming Democrats are not ‘playing fair’ when they get called for their actions). Actions, actions speak much louder than words. Words that are not supported by our own actions will be ignored more and more until our country’s international rhetoric becomes completely meaningless.
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KansasTamale's Opinion
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03/02/2020
This bill is a waste of time. Where do we get off trying to tell the rest of the world what to do when we don’t even know what is going on in our own country. We don’t even know how many loans the Chinese and the Russians have made to Trump Or how much money he’s laundered for them to pay off his loans because he’s too chintzy to pay the loans. That’s the reason he didn’t get any banks in the US to loan him money in the United States. He NEVER PAYS HIS BILLS. WHY WASN’T HE MADE TO SHOW HIS Finances before he Ran ???
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larubia's Opinion
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03/02/2020
So, we want China to be transparent with their lending? We get a law passed & I’m sure they will hop to it!!??? I find it laughable that we want to legislate that another government is transparent, when we have a sitting, impeached president who hasn’t shown his tax records. How about we pass a law for all candidates seeking public office to show their tax records for the last seven years?
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house Passed March 2nd, 2020
    Roll Call Vote 356 Yea / 0 Nay
    IntroducedFebruary 21st, 2020

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What is House Bill H.R. 5932?

This bill — the Ensuring Chinese Debt Transparency Act of 2020 — would establish that it’s U.S. policy to use America’s voice and vote at international financial institutions (such as the International Monetary Fund and the World Bank) to secure greater transparency about the terms and conditions of financing China provides to recipient nations under the rules & principles of the Paris Club. It would require the chairman of the National Advisory Council on International Monetary and Financial Policies to produce a report describing progress toward that goal and discussing the financing provided by China along with any recommendations.

The Paris Club is an informal group of 22 major creditor countries (nations that make loans to debtor countries), that work together on frameworks to reduce and restructure the debt burdens of countries that receive IMF and World Bank loans to promote sustainable growth and financial transparency. China is not a member of the Paris Club despite being the world’s largest official creditor, which leaves debtor countries and international institutions with an incomplete understanding of how much countries owe China and the terms attached to that debt.

The requirements of this bill would sunset seven years after its enactment, or 30 days after the Treasury Secretary notifies relevant congressional committees that China is in compliance with the rules of the Paris Club — whichever occurs first.

Impact

U.S. participation in the IMF, World Bank, and other international financial institutions; China; and countries receiving loans from China.

Cost of House Bill H.R. 5932

A CBO cost estimate is unavailable.

More Information

In-Depth: Introduced by Rep. French Hill (R-AR) and cosponsored by Rep. Emanuel Cleaver (D-MO), this bill would make it U.S. policy to use its influence at international financial institutions to pursue greater transparency about loans made by China to debtor nations, which often aren’t tracked or disclosed.

The lack of transparency around these “hidden loans” poses a risk of precipitating an economic crisis. Carmen Reinhart, a professor at the Kennedy School of Government at Harvard University, explained at the Nomura Investment Forum in Singapore:

“China’s rise as a global creditor has also meant that there are a lot of hidden debts. That is, countries that had borrowed from China but this borrowing is not reported by the IMF, by the World Bank. So there is a tendency to think these countries had lower debt levels than what they actually have. From the vantage point of surveillance, this means that the IMF, if they’re doing debt sustainability for example for Pakistan, unless they know how much Pakistan owes China they are doing that sustainability exercise blindfolded.”

Before he became president of the World Bank, then-Under Secretary of Treasury for International Affairs David Malpass explained to a congressional committee in 2018 how these Chinese loans are hidden:

“They’re not made public, they’re not given to the international committee, but sometimes they’re not even available to certain parts inside the government itself. That’s an issue because China may make a loan, but not really want the terms of the loan to be disclosed even within the government that it’s lending to.”

The World Bank released a statement to CNBC explaining the importance of debt transparency:

“Borrowers need comprehensive and timely debt data to make informed decisions. It also allows lenders to manage lending risks more efficiently — thereby bringing down the cost of lending for everyone… In short, debt transparency is essential for economic development. So when debts are ‘hidden,’ that’s a problem for everyone — not just the World Bank or the IMF. It’s especially a problem for the citizens of countries whose hidden debt is suddenly discovered, since uncertainty can lead to higher funding costs or, in the worst case, cut them off from funding.”

Harvard Business Review analysis from February 2020 found that “50% of China’s loans to developing countries go unreported, meaning that these debt stocks do not appear in the “gold standard” data sources provided by the World Bank, the IMF, or credit-rating agencies.” It adds:

“Looking ahead, we find that credit outflows from China have slowed markedly since 2015, in parallel to China’s ongoing domestic economic slowdown. We’ve also documented a recent surge in the number of credit events on Chinese loans, which have not appeared in the reports of international credit rating agencies. Since 2011, two dozen developing countries have restructured their debt to China. This recent increase in the incidence of sovereign debt restructurings of Chinese debt may have a benign interpretation, but given the slower growth and lower commodity prices of recent years, it may well be a sign of brewing liquidity and solvency problems in numerous developing countries. Against this backdrop, much more work is needed to analyze the characteristics and potential impact of China’s lending around the world. If China’s role in international finance continues in the shadows, global risk assessments and country surveillance work will remain dangerously incomplete.”


Media:

Summary by Eric Revell

(Photo Credit: iStock.com / Grindi)

AKA

Ensuring Chinese Debt Transparency Act of 2020

Official Title

To ensure greater transparency about the terms and conditions of financing provided by China to member states of the international financial institutions.

    We should push for financial transparency in loans across the board! Not only China but Russia that has underwritten Trump Deutsch Bank Loans. Thank you Jamie Raskin for voting, “Yea”!
    Like (36)
    Follow
    Share
    When our Country once again leads by our example, this should be revisited. Transparency is always a good practice which in financial markets does put all of the players on common ground and tends to assure an equitable basis for lenders and borrowers alike. When we can demonstrate this transparency to our world partners by our country’s own actions- then we have a basis for insisting that they ‘play fair’ as well. Demanding others play fair while stacking the deck in your favor is fundamentally dishonest (like trumpublicans stacking the deck of court appointees and then claiming Democrats are not ‘playing fair’ when they get called for their actions). Actions, actions speak much louder than words. Words that are not supported by our own actions will be ignored more and more until our country’s international rhetoric becomes completely meaningless.
    Like (52)
    Follow
    Share
    This bill is a waste of time. Where do we get off trying to tell the rest of the world what to do when we don’t even know what is going on in our own country. We don’t even know how many loans the Chinese and the Russians have made to Trump Or how much money he’s laundered for them to pay off his loans because he’s too chintzy to pay the loans. That’s the reason he didn’t get any banks in the US to loan him money in the United States. He NEVER PAYS HIS BILLS. WHY WASN’T HE MADE TO SHOW HIS Finances before he Ran ???
    Like (39)
    Follow
    Share
    So, we want China to be transparent with their lending? We get a law passed & I’m sure they will hop to it!!??? I find it laughable that we want to legislate that another government is transparent, when we have a sitting, impeached president who hasn’t shown his tax records. How about we pass a law for all candidates seeking public office to show their tax records for the last seven years?
    Like (27)
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    What exactly do y’all think China is going to do? Oh my bad here you go? No. This is useless.
    Like (14)
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    The biggest problem right now is who Individual #1 is compromised by other than Russia. Those are the the bank records every concerned American should want to see.
    Like (12)
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    Why? What business is it of ours unless we intend to offer the exact same transparency to every other nation out there and them to us. That indeed sounds very globally socialist rather than nationally capitalistic and doesn’t seem like something ImPOTUS would go for. We have no more right to another country’s proprietary business information than they have to ours.
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    As much as I wanted to say yes regarding this legislation I’m skeptical and think the US would be unsuccessful in enforcing China to be transparent. We are not in charge of China or any other country no more than they are in charge of the US and can mandate how to run our country. It doesn’t matter how much our government thinks our way is better—it isn’t our place to think we can force another government to do something. Albeit, the intent behind this legislation is good, but it can’t be enforced. If we, or other countries don’t like how China is treating other countries the only thing that can be done is to alter how we do business with them.
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    Transparency? Do you mean how the Federal Taxpayers dollars are spent? Secret black budgets” for our protection.
    Like (7)
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    The Ensuring Chinese Debt Transparency Act of 2020, yes, we could start with Trump and Trump’s family, then Russia and Saudi Arabia. Which most likely his taxes would show anyway.
    Like (6)
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    Dark money? Transparency? Seriously?? We’re lecturing anyone about this? Let’s see Trump’s taxes. Let’s see Ivanka’s Chinese patents. Let’s see the Trump’s business ties to China, and Russia, and Saudi Arabia. Before we start a screed about the mote in someone else’s eye, perhaps we should take care of the plank in our own.
    Like (5)
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    The USA, under this administration, no longer cares about transparency. Look at the months of denial and no access to evidence. This bill is another example of “do what I say, not what I do” American Imperialism.
    Like (5)
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    What is that saying,,"Cleanup your own backyard before you go criticizing mine. We can’t get our own president to be transparent with his personal and business financials. Give me a break
    Like (5)
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    Maybe Congress should see how much they have borrowed in loans from China along with companies selling out to China in this country.
    Like (4)
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    As much as we would like to think, we are not the world's police.
    Like (4)
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    Let's work on our own failures at transparency.
    Like (4)
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    These loans are a part of Chinese plan called the Slik and Belt Loans. The idea is to give a road into financial domination of underdeveloped or they pay off the loan and turn out fine-unlikely because even Moody’s wouldn’t give them a loan.
    Like (4)
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    Here again, the problem is our own so-called Prez. He has suppressed the rule of law /Constitution in the US. Why should we feel we can legislate ANYTHING to China ? The “Lock-Step” Trumpublicans will rubber stamp anything the orange lord says. Where are those that brandished their Pocket Constitutionalists ? Hope there is a resurgence of common sense....
    Like (3)
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    China is always up to no good and trying to get the advantage we should be keeping an eye on everything that they do. They are our number one foe in the world.
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    We are not the world police. Unless you, representative, would like to start embracing the nazi Germany ideology, then I suppose we can't stop you.
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