The Chinese Aid System seas investment, with total assets of USD 2.4 trillion in 2019. It provides USD or EUR-denominated medium- and long-term market-rate loans to government institutions and companies. The base interest rate is typically set to the (floating) LIBOR rate with an additional margin incorporat­ed to account for borrower-specific risk and repayment ca­pacity(see Table 1). The CDB sources its capital largely through bond issuances(71 per cent in 2014), corporate deposits(24 per cent), borrowing from PBOC and govern­ment organs(5 per cent), and limited foreign currency bonds. It enjoys a competitive rate when borrowing from government sources, at approximately 2 to 3 per cent. It can also raise funds cheaply through bonds due to its state backing, meaning it can offer the same rate as govern­ment bonds. 84 The CDB’s interest rate is usually higher than that of the World Bank, but in cases of political inter­est, it may offer a very low interest rate(for example, the Jakarta-Bandung High-Speed Rail was offered a rate of 2 per cent). Concessional loans are the main form of Chinese foreign aid and are mainly used for large-scale infrastructure construc­tion and the supply of large quantities of mechanical and electronic products and complete equipment. Their interest rate is below China’s central bank’s benchmark rate, usually a fixed rate of 2–3 per cent; the margin is subsidised by the MOF(see Table 1 for typical terms). In the process, the Chi­na Exim Bank is responsible for the appraisal of proposed loan projects, signing of loan agreements, giving out loans, post-loan management, and the recovery of loan principles and interests. Typically, loan projects are proposed to the China Exim Bank by CIDCA(in the past, they were proposed by MOFCOM) after negotiations during intergovernmental consultations. All concessional loan projects must be ap­proved by CIDCA. Projects can also be proposed by Chinese companies or by recipient country governments. These pro­posals are made either to the Chinese embassy, a relevant ministry, or to MOFCOM’s provincial subsidiaries(a Depart­ment of Commerce). The CDB is a ministry-level government agency under the direct supervision of the State Council and under the regu­lation of the CBIRC. It has the status of a“development fi­nance institution” to support China’s national initiatives (e. g., China-Africa cooperation and the BRI) and should prioritise China’s political objectives over profits(though avoiding losses). Though it has played a key role in the BRI and China’s overseas finance and has something of a hy­brid status as a bank, the Chinese government insists that CDB is not an official bilateral lender. Instead, the Chinese government insists it be listed as a commercial bank in the DSSI. Preferential export buyer’s credits are often confused with foreign aid by external observers but are, in fact, export subsidies. They are given to government institutions for the purchase of goods and services from Chinese companies. No intergovernmental agreements are required. Generally, they are slightly more expensive than concessional loans (higher rates, shorter maturities, shorter grace periods); these credits are financed by China Exim Bank’s own capi­tal and are not subsidised by the government. Moreover, these credits can support up to 85 per cent of a project’s costs; however, a 15 per cent counterpart contribution is re­quired. Despite its large role in China’s overseas lending, the CDB is considered inexperienced and weak in credit risk man­agement in Chinese development circles. 85 Unlike the PBOC, which recruits Western-trained economists, most of the CDB’s top management comes from the Agricultural Bank of China. In addition, the CDB was recently rocked by a major corruption scandal involving former CEO Hu Huai­bang, who was forced to resign in 2018 and is now serving a life sentence in prison. During this time, both CDB and China Exim Bank were subject to external audits which sig­nificantly affected their overseas lending. The China Exim Bank is a vice-ministry-level government agency under the direct supervision of the State Council and is under the regulatory oversight of the CBIRC. It has the sta­tus of a“policy-based finance institution”. Like the CDB, it should support China’s national strategies. Unlike the CDB, it is not required to make a profit(though it should not op­erate at a loss). Policy banks in China are ministry-level agencies ­under the State Council China Export-Import Bank(China Exim Bank) Established in 1994, and with USD 610 billion of assets as of 2018, China Exim Bank’s assets amount to only one-quarter of those of the CDB’s. It is China’s main lender to lower-in­come countries and fulfils a dual function as an official bilat­eral creditor, providing RMB-denominated concessional loans, and as an export credit agency, providing USD-de­nominated preferential export buyer’s credits. 84 Chen, M.(2020). Beyond Donation: China’s Policy Banks and the Re­shaping of Development Finance. Studies in Comparative International Development 55(4), 436–459. https://doi.org/10.1007/s12116-020­09310-9 85 Rudyak& Chen(2021). China’s Lending Landscape. Policy banks within China’s bureaucratic system have a much different status than in Germany and other major donor countries, where policy banks are typically subor­dinate to an authority(ministry or a government agency) that is politically responsible for development coopera­tion or development financing. By contrast, China Exim Bank and CDB are independent ministry-level agencies that are not subordinate to China’s MOF(which repre­sents China in multilateral development finance negotia­tions), the Ministry of Foreign Affairs, or CIDCA. As such, directives that influence their activities, including their approach to debt restructuring, must come from the State Council or the CCP Central Committee. 21