As the coronavirus pandemic reaches its peak in the US and Europe, emerging market countries do what they can to limit its spread. With limited medical infrastructure to contain the disease, and economies vulnerable to a locked-down global economy, these nations are also being watched by China, the country that first suffered from Covid-19 in the city of Wuhan.

Having beaten back the virus for now, China is now embarking on a campaign of narrative shaping, as part of a longer game. Emerging market nations have become a cornerstone of China’s global superpower ambitions, underpinned with billions in bilateral loans. In some countries, the spigot of Chinese cash has supplanted western capital markets as a source of funding. Thanks to some brilliant sleuthing by a trio of academics, we can now visualise just how striking the trend is.

Published last year, the research by Sebastian Horn, Carmen Reinhart and Christoph Trebesch compiled data on almost 2,000 Chinese loans as of 2017 using a wide range of sources. As noted by the authors, these loans do not appear in official databases such as the Bank for International Settlements or vendor databases such as Bloomberg.

One of the authors, Trebesch, generously shared the source dataset with Risky Finance and we have combined it with our existing Markit iBoxx database of emerging market sovereign bonds to produce our visualisation. What’s striking is how so many nations have become dependent on Chinese loans, emphasised when we scale the borrowing as a percentage of GDP.

This visualisation shows the iBoxx sovereign emerging market bond universe together with the Chinese bilateral loan database compiled by Horn, Reinhart and Trebesch. Each rectangle is sized according to notional amount of the respective issuer divided by GDP. The colour of each rectangle is determined by the price of all the country's bonds, with the lowest prices in red. Click on the country headings to expand the view, and right click to return to the index overview. Data source: Markit iBoxx

Consider the huge purple square in the top left corner. That’s the tiny African nation of Djibouti, strategically positioned on the Gulf of Aden, which has borrowed more than 100% of its GDP from China. Also prominent are countries such as the Maldives, Cambodia, Kyrgyzstan and the South Pacific nation of Tonga that have borrowed a third or more of GDP.