Important story from the FT -- China accounts for $1.9b of the (very modest) $5.3b rescheduled through the G-20's DSSI. But $1.9b is modest v the (at least) $13.4b owed to China by DSSI countries ...

1/x
Of course, the benefits of the DSSI go mostly to the countries with the most debt -- and thus China's totals could go up if China's big three policy/commercial or hybrid lenders agreed to reschedule maturing claims on Angola

2/x
Discussion of Zambia is clearly hindered by a lack of good data -- I have been digging into this case, and a lot of China's exposure (China Exim and ICBC for example have a big hydropower loan) isn't directly too the government and thus isn't likely in the WB data

3/x
The latest World Development Indicators data set has Zambia's total external debt at $27b -- far more than in the DSSI data set which limits itself to public and publicly guaranteed debt and thus misses a lot of project financed designed to stay off balance sheet

4/x
So this chart likely understates the amounts Africa owes Chinese creditors, as it leaves out the debt that have been notionally kept off the public sector's balance sheet (oil project finance, energy co project finance)

5/x
And I find the notion that China's finance is particularly fragmented a bit over-stated. The bulk of the exposure is to three institutions: China Exim, the CDB and ICBC. They could sort this out by disclosing how much they are owed quite easily.

6/x

ft.com/content/bd73a1…
The commerce ministry also has some concessional funding, but that isn't the problem -- the real problem is China Exim (including the DSSI mostly but not always it seems) and the CDB and ICBC (outside the DSSI).

7/x
The lines China draws between different state entities cannot be determinative nor can they be allowed to stop basic disclosure. Politically this is hard, but technically it is easy: the same three institutions seem to be present in most cases

8/8

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More from @Brad_Setser

27 Oct
Yes, absolutely. An important point.

Also please note that the numbers here are cumulative loans not current exposures. At the same time, the WB numbers on exposures miss a lot of project finance.

1/x
Another important point -- both China and bond holders have lent to a (subset) of African countries at higher rates than the MDBs/ the traditional bilateral creditors. So the interest bill for those countries that have borrowed has increased faster than the stock of debt

2/x Image
A chart from a recent report by the Group of Thirty that (hopefully) highlights how not all low income countries are in the same position

(higher numbers on both the x and y axis are bad ... )

group30.org/publications/d…

3/3 Image
Read 4 tweets
27 Oct
I am impressed @ChadBown

Seasonal adjustments are actually kind of important here (ag is the most important category ... and it is, umm, classically seasonal)

And, well, the interesting story in the September data is in the ag numbers

1/x Image
My (more modest) seasonal adjustment looks at the monthly data. The 'beans numbers were (as expected) solid. September basically made up for a weak start of the year. I hear the 'bean harvest came in early, and supplies in Brazil are by all accounts tight

2/x Image
Bean exports should top the 2017 base given the orders data USTR highlighted and current bean prices. Topping 2016 may be harder ...

(But don't forget 2018 -- the empty bar there isn't an accident; China showed that its state import companies control the market)

3/x
Read 8 tweets
26 Oct
Turkey's banks now have more foreign currency exposure to the government and the central bank than they have to Turkey's firms.

cfr.org/blog/changing-… Image
The Government of Turkey stepped up its local foreign currency denominated debt issuance this summer --

And the banks have lent a ton of fx to the CBRT, which normally would be viewed as a safe exposure but, well, the CBRT itself doesn't have much fx left Image
For the historically minded, Turkey's increased domestic dollar and euro denominated borrowing has some parallels with Mexico's issuance of tesobonos way back in the mid 1990s ...

Cuts borrowing costs, but generates substantial rollover risk Image
Read 6 tweets
26 Oct
The FT has looked into China's participation in the G-20 Debt Service Suspension Initiative. Looks like China only rescheduled $1.9b of $13.4b coming due this year -- if that's true, there were large net payments back China amid the pandemic

1/x

ft.com/content/bd73a1…
The total could go up though, as China and Angola are apparently (still) negotiating over the rescheduling of $6.7b (that includes funds due in 2021) -- a rescheduling required under Angola's IMF program

(Angola was always going to be the main beneficiary of the DSSI)

2/x Image
The lack of accurate data is a function of Chinese policy not to be transparent: in almost every country, the same three Chinese institutions (China Exim, CDB and ICBC) account for the bulk of exposure (the Commerce Dept has some zero rate concessional loans)

3/x Image
Read 6 tweets
25 Oct
Fair summary of the data on the impact of Trump's China tariffs by @bobdavis187 and @JoshZumbrun.

1/x

wsj.com/articles/china…
Has some interesting color on polysilicon (used in solar PVs) as well. Apparently the Chinese tariff on polysilicon wasn't lifted in the phase one deal.

And, well, China is hard market once China targets a given sector

2/x
There are some measures on the agricultural side that if sustained should raise US exports (approval of pork and beef exports, rolling back retaliatory tariffs on chicken parts). But always has a bit unclear (imo) how the phase one deal would raise exports of manufactures

3/x
Read 9 tweets
23 Oct
September's FX settlement data (settlement includes the PBOC and the state banks) provides the first obvious sign of renewed intervention -- settlement, adjusted for forwards, jumped $10b in September

1/x Image
A reminder -- China historically has needed to intervene more when the yuan is appreciating than when it is stable or falling (as controlling the pace of appreciation takes the PBOC's balance sheet)

2/x Image
To be sure the $10b in purchases in the settlement data in September is only visible purchase in the traditional intervention proxies in the last 3ms, and it remains is modest v the $150b plus trade and bond inflow -- there is more going on

3/x Image
Read 4 tweets

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