China owes the Belt and Road Initiative more than $1 trillion: report
BEIJING: According to a report this week, China is the world’s largest debt collector, with more than a trillion dollars due it through the Belt and Road initiative. Approximately 80% of the loans are projected to be for the benefit of financially distressed nations.
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As of now, President Xi Jinping’s ambitious global infrastructure initiative, known as the Belt and Road Initiative (BRI), has more than 150 signatory nations, ranging from Uruguay to Sri Lanka, according to Beijing.
China disbursed massive loans over the first ten years of the initiative to finance the building of ports, roadways, and bridges in low- and middle-income nations.
However, according to a report published on Monday by AidData, a research organisation that tracks development financing at Virginia’s College of William and Mary, far more than half of those loans have already reached their primary payback phase.
By the end of the decade, that percentage is expected to reach 75%, it continued.
After analysing data collected on Chinese funding of nearly 21,000 projects in 165 countries, AidData said that Beijing was currently providing low- and middle-income countries with aid and credit “hovering around $80bn a year.”
In contrast, the United States gives these nations $60 million annually.
According to the research, Beijing is adjusting to a new and unsettling role as the largest government debt collector in the world.
According to AidData, there is “at least $1.1 trillion in outstanding debt—including principal but excluding interest—from borrowers in the developing world to China.”
According to AidData, 80 percent of China’s foreign lending portfolio in the developing world is presently aiding nations experiencing financial hardship.
The BRI’s supporters applaud it for providing the Global South with resources and economic expansion.
However, detractors have long cited Chinese corporations’ opaque pricing for such projects, and nations like Malaysia and Myanmar have renegotiated agreements to save expenses.
Additionally, according to AidData, China’s standing among developing nations has declined recently, with its approval rating dropping from 56% in 2019 to 40% in 2021.
However, the report noted that China is “learning from its mistakes and becoming an increasingly adept crisis manager.”
Beijing emphasised that by aligning its financing practises with global norms, it hopes to reduce the risk associated with the BRI.
However, it added that “increasingly stringent safeguards to shield itself from the risk of not being repaid” are also among those strategies.
This includes enabling important BRI lenders to “unilaterally sweep” the foreign exchange reserves held in escrow by borrowers in order to cover their principal and interest obligations.
