US faults China over opaque overseas lending, warns of emerging-market debt risks

The United States has expressed concerns over the lack of transparency in China's overseas lending, warning that it could heighten the risk of defaults and debt restructuring in emerging markets. The State Department's 2026 Fiscal Transparency Report, released on Tuesday, found that China failed to meet minimum transparency requirements, citing issues with both its domestic finances and the disclosure of claims against foreign borrowers.

Beijing's opacity in its overseas lending practices, particularly in relation to sovereign funds, banks, and state-owned enterprises, was highlighted as a significant issue. The report called on China to publish detailed information about these claims, asserting that such transparency would improve risk assessments and mitigate the likelihood of unexpected defaults.

While the report does not specify a particular borrower or financing arrangement affected, it emphasized the need for China to adhere to established procedures in resource contracts and licensing. The State Department also cited deficiencies in China's domestic fiscal system, including incomplete government debt records, lack of transparency in state-owned enterprise allocations, and off-budget accounts that lack audit oversight.

Although the report did not directly link the transparency issues to predatory lending, it noted that the lack of disclosure undermines accurate risk assessments, potentially contributing to such practices.