Great trap of China
1 min read 28 Mar 2023, 10:50 PM ISTA study by researchers from the World Bank, Harvard Kennedy School, AidData and Kiel Institute for the World Economy shows that China advanced a staggering $240 billion in bailout loans between 2008 and 2021 to 22 developing nations, including Pakistan, Argentina and Mongolia
PremiumA study by researchers from the World Bank, Harvard Kennedy School, AidData and Kiel Institute for the World Economy shows that China advanced a staggering $240 billion in bailout loans between 2008 and 2021 to 22 developing nations, including Pakistan, Argentina and Mongolia. Much of that money was lent in the last five years as countries struggled to repay money borrowed under Beijing’s Belt and Road Initiative (BRI). The share of China’s loans to countries in debt distress surged to 60% of its overseas lending portfolio by 2022, up from just 5% in 2010. This underscores Beijing’s efforts to keep its BRI partners from defaulting as a swathe of projects failed. Countries that had signed up hoping for an infrastructure-led economic boom are now saddled with debt for which Beijing typically charges interest rates higher than multilateral agencies. And often, the terms of these loans are too opaque for Beijing’s intentions to be deciphered. China has used its financial dealings to gain leverage over countries. This is suspected to be part of a geopolitical strategy aimed at projecting power far beyond its shores. If so, such designs need to be foiled.
