One Belt, One Road financing exceeds US$1 trillion, making China the world’s largest creditor
(AFP, Beijing, 7th) A report released this week pointed out that the Belt and Road Initiative has made China the world’s largest creditor, with debt owed to China exceeding US$1 trillion, and an estimated 80% of the loans come from countries in deep financial distress. China says more than 150 countries from Uganda to Sri Lanka have signed up to join the Belt and Road Initiative, the ambitious global infrastructure plan launched by Chinese President Xi Jinping 10 years ago. China provided huge loans during the first decade of the initiative to finance the construction of bridges, ports and roads in low- and middle-income countries. However, according to a report released yesterday by research organization AidData, more than half of these loans have entered the principal repayment period. AidData from the College of William and Mary in Virginia, USA, tracks development financing. The report states that this number will climb to 75% by 2030. AidData said that China has provided financing to nearly 21,000 projects in 165 countries, and currently has committed aid and loans to low- and middle-income countries “on the scale of US$80 billion a year.”
In comparison, the United States provides $60 billion a year to such countries. The report states: “Beijing has become the world’s largest official creditor, a role it is unfamiliar with and uncomfortable with.” AidData said, “The total outstanding debt owed by developing country lenders to China, including principal but before interest, is at least Reaching US$1.1 trillion”, “It is estimated that 80% of China’s current overseas lending portfolio to developing countries is invested in supporting countries in financial distress.”
Supporters praise the Belt and Road Initiative for providing resources and economic growth to the Global South. However, the projects built by Chinese companies have long been criticized for being opaque in terms of funding requirements, and Malaysia and Myanmar have renegotiated to reduce costs.
AidData said that China’s national image in developing countries has been severely damaged in recent years, and its local support has dropped from 56% in 2019 to 40% in 2021. However, the report also mentioned that China “learns from its mistakes and is becoming more and more adept at crisis management.” The report says China’s pursuit of de-risking includes “increasingly stringent safeguards to protect itself against the risk of non-payment of loans”, including allowing major Belt and Road lenders to “unilaterally wipe out” loans in order to recover outstanding debt and interest. foreign currency reserves held in trust.
“These seizures of funds are often conducted clandestinely and in a manner that is not directly accessible to domestic supervisory agencies in low- and middle-income countries…The technique of obtaining cash collateral without the consent of the borrowing country has become an especially important safeguard in China’s bilateral loan portfolio .”
Xi Jinping announced at the Belt and Road Forum for International Cooperation in Beijing last month that China would invest more than $100 billion in the initiative.
#Belt #Road #financing #exceeds #US1 #trillion #making #China #worlds #largest #creditor
2023-11-07 11:50:01
