What Is External Debt?

External debt refers to a country's liabilities to foreign countries. According to the definitions of the International Monetary Fund and the World Bank, external debt is "including all liabilities for which non-residents have a liability to pay in foreign currency or local currency as the accounting unit." The net external debt is equal to the total external debt of a country, minus all claims of non-residents of that country's residents (ie overseas assets). The total external debt and net external debt both reflect the external debt accumulated in the past years, that is, the stock of external debt; the balance of payments capital account reflects the annual change in external debt, that is, the flow of external debt. ^[1]

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Opium War

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After the founding of the Republic of China, successive governments in order to get rid of economic difficulties, such as the "aftermath borrowing", "Xiyuan loan", "Hua Ning Treasury loan", and the Ministry of Finance, Transportation and other loans. The old debt plus the new debt, the debts are getting higher and higher. As of 1927, there were 467 types of debts, totaling more than 1.3 billion yuan (silver dollars). After the establishment of the Nanjing National Government, the United States, Britain and other countries held "American-Mercedes Loans", "Cotton-Merry Loans", "Sino-British-Guangdong-German Railway Gorge Loans", "Road Construction Loans" and "Sino-French Education Fund Committee Loans "Wait for fourteen. The total debt amount is more than 330 million US dollars. During the War of Resistance Against Japan, 29 debts were raised from the United States, the Soviet Union, Britain, and France (such as U.S.-China tung oil loans, U.S.-China metal loans, U.K.-China credit loans, Sino-UK credit loans, Soviet Union Sino-Soviet trade loans, and French Sino-French financial loans, Sino-French-Kunming railway loans, and Germany, Czech Republic, Belgium and other countries), the total debt amounted to more than 1.4 billion US dollars. After the war, the National Government held "China-US Cotton Loans", "China-US Railway Purchase Materials Loans", "China-US Ship Purchase Loans", "Lease Legal Materials", and "Military Aid Materials to China" to the United States and Canada. Nine debts totaling more than $ 6 billion. The imperialist creditor countries have used foreign debt as a tool to compete with each other for political, economic, and military privileges in China, and have been competing directly or indirectly for a long time. After the founding of the People's Republic of China, it announced the abolition of all foreign debts borrowed in accordance with unequal treaties, and held debts with foreign countries on the basis of equality and mutual benefit.