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U.S. officials are among those who have criticized China for being unwilling to accept losses on loans unless private-sector creditors and multilateral development banks do the same. Consequently, Beijing has sometimes engaged in direct talks with debtor countries.

Following a recent deal for Zambia to finance its debt to international creditors, China’s foreign ministry said Tuesday the Export-Import Bank of China had reached a tentative agreement with Sri Lanka on its debt servicing.

https://www.cnbc.com/2023/10/13/saudi-minister-defends-chinas-bri-lending-to-developing-nations.html

Why won't China accept losses on loans and want private creditors and multilateral institutions to do the same? I don't understand what China, private lenders and multilateral institutions have to gain from not accepting losses on loans. Is there some accounting or financial advantages that they gain by doing so? Isn't it better to accept losses so you don't turn into a zombie bank or institutions?

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    "I don't understand what [they] have to gain from not accepting losses on loans." - presumably, they gain further repayment!
    – Steve
    Nov 26, 2023 at 14:10

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I think you are missreading what the statement actually says. Suppose both China and some private-sector creditor gave a loan to some poor country. Now the country says it is not able to pay back all the loans and wants part of the debt to be forgiven.

The statement you quote means China will only consider forgiving part of its loan if the other creditors do the same. They will not accept a deal where China forgives part of their loan and the other creditors get back their loans completely.

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