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US warns China’s opaque overseas lending could spur EM defaults
In its 2026 Fiscal Transparency Report, the US State Department said China does not meet minimum transparency requirements for foreign loan disclosures, citing risks of unexpected defaults or debt restructuring in emerging markets.
The United States has stepped up scrutiny of China’s overseas lending, warning that limited transparency around Chinese loans and other foreign claims could raise the risk of unexpected defaults and debt restructuring in emerging markets, according to a 2026 Fiscal Transparency Report released by the US State Department.
The report said China failed to meet minimum transparency requirements, pointing to deficiencies in both domestic finances and the disclosure of claims against foreign borrowers, including loans held by state-owned and private commercial banks as well as state-owned enterprises.
It added that the lack of disclosure makes it harder to assess risks accurately and increases the likelihood of disruptive outcomes for sovereign borrowers, including defaults or restructuring.
The department also introduced a requirement for governments to publish the terms and conditions of sovereign loans they provide to foreign borrowers, including liabilities and any collateralised assets.