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China Faces ‘Creditor Trap’ in Lending to Latin America: Q&A

  • Author Stephen Kaplan suggests China will be more cautious
  • He also says Chinese state loans used as export-boost tool
People's Liberation Army soldiers stand in front of the People's Bank of China in Beijing, China.

People's Liberation Army soldiers stand in front of the People's Bank of China in Beijing, China.

Photographer: Andrea Verdelli/Bloomberg

China will be more cautious about extending loans to Latin American countries after difficulties securing repayment suggest it has sometimes fallen into a “creditor trap,” according to the author of a new book on Beijing’s lending to the region.

Yet China won’t abandon state-to-state lending as it still sees loans as a tool to boost exports, Stephen Kaplan, a former economist at the New York Federal Reserve, said in an interview about his recently published “Globalizing Patient Capital: The Political Economy of Chinese Finance in the Americas.”