Our study makes three key contributions by providing empirical evidence verifying the impact effects of China’s official external lending and its components on host countries’ country risk: First, this paper confirms the risk-reducing effects of China’s official external lending and its components (concessional lending, commercial and other lending) on host countries’ country risk, providing important empirical evidence for understanding host countries’ country risk mitigation mechanisms. Second, this paper reveals the ‘black box’ pathways through which China’s official external lending and its components reduce host countries’ country risk within a unified framework, supporting the mediating roles of economic growth and social stability in how China’s official external lending and its components affect host countries’ country risk, thereby offering profound insights into the operational mechanisms. Third, this research extends existing frameworks by systematically examining the impacts of China’s official external lending and its components on different types of host country risks (financial, economic, and political risks), while also using panel quantile models to uncover differential effects across various country risk quantiles, thereby enriching the literature in international development finance.
