Comments on China in Africa: The Real Story: US Eximbank versus China Eximbank

I haven't forgotten about fees. China Eximbank...

2011-12-12T16:59:31.400-05:00

I haven't forgotten about fees. China Eximbank also charges "management fees, commitment fees and other fees relevant to the loan. For projects not covered or partially covered by export credit insurance, the Bank will charge exposure fees on the exposed part of the loan." This is standard for export credit agencies. When China Eximbank can secure a loan with an escrow account and an off-take arrangement, they can offer a lower loan rate as risks are lower.

You've completely forgotten about the exposure...

2011-12-10T09:21:41.018-05:00

You've completely forgotten about the exposure fee ExIm Bank charges in addition to the interest rate on guarantees (LIBOR + spread) or direct loans (CIRR). http://www.exim.gov/tools/fee_calc.cfm

When you add the exposure fee to the interest rate and then consider the terms ExIm are confined by in the OECD arrangement on export credits (http://www.oecd.org/department/0,3355,en_2649_34171_1_1_1_1_1,00.html), one can only conclude that China subsidizes most, if not all, transactions. They are not pricing to risk for the tenors they offer at supposed "commercial terms."

A reader provided information that U.S. Eximbank&#...

2011-12-09T15:53:23.876-05:00

A reader provided information that U.S. Eximbank's Annual Reports contain the interest rates (but not the terms) of all loans it makes directly. These look in most cases quite low, and not so different from China's concessional loans. It doesn't contain any LIBOR plus interest rates for loans guaranteed by U.S. Eximbank, however, and this is the bulk of U.S. Eximbank's work. Still, interesting stuff. For more, see http://www.exim.gov/about/reports/ar/2011/Loans_and_Long-Term_Guarantees.edited.11-17-11.pdf

Very well written article. I've found that the...

2011-12-08T12:46:31.184-05:00

Very well written article. I've found that the Chinese seem to be a bit more startup friendly than the US, with Sinosure backing capital loans to startups without the need for a 1 year operating period that EXIM requires. In addition, Chinese manufacturers are more export savvy than their US counterparts.