The United States has stepped up scrutiny of China’s overseas lending, warning that the lack of transparency surrounding Chinese loans could increase the risk of unexpected defaults and debt restructuring in emerging markets.
In its 2026 Fiscal Transparency Report released on Tuesday, the US State Department said China had failed to meet its minimum transparency requirements, citing deficiencies in both its domestic finances and the disclosure of claims against foreign borrowers.
“China’s lack of transparency related to its foreign claims – including loans and other obligations held by state-owned and private commercial banks and state-owned enterprises – obscures the scale and terms of many sovereign liabilities,” the report said.
The lack of disclosure undermined accurate risk assessments and increased “the likelihood of unexpected defaults or debt restructuring in emerging markets”, it added.
The warning came as the department added a requirement that governments make public the terms and conditions of sovereign loans provided to foreign borrowers, including liabilities and collateralised assets.
The report did not say whether the new requirement was introduced specifically in response to China, a major source of financing for infrastructure and development projects across Asia, Africa, Latin America and other parts of the developing world.