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.
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?