Nicola Limodio discussion of: China’s international lending programme

JThe past 20 years brought about the transformation of China into a manufacturing giant, which created rapid and swift changes in economic and financial indicators across firms and countries. The “China Shock” has also shaped heterogeneously other aspects of the global economy like trade (Autor et al., 2016), labour (Autor et al., 2013), currencies (Bahaj and Reis, 2020; Clayton et al., 2022), financial flows (Hombert and Matray, 2018; Barrot et al., 2022), foreign direct investment (Crescenzi and Limodio, 2021), among several others. A significant consequence of the rise of China is its new role in global credit markets. In fact, from 2018 onwards, China has become the largest lender in the world. Chinese direct loans and trade credit exceed 1.5 Trillion USD and amount to more than 5% of the global Gross domestic product (GDP) (Horn et al., 2020, 2021). Interestingly, these flows surpass the combined lending of the World Bank, International Monetary Fund and OECD governments. These numbers are surprising since China is also the second largest recipient of World Bank funding