In the last two decades, China has granted rescue loans worth of $240 billion to 22 developing countries at risk of defaulta trend that has accelerated in recent years, according to a report released Tuesday.
According to the study, almost all of the funds went to Belt and Road Initiative countries (BRI) such as Sri Lanka, Pakistan and Turkey, mostly low and middle income nations that have received Chinese loans for infrastructure development.
The 40-page report by US-based research lab AidData, the World Bank, the Harvard Kennedy School and the Kiel Institute for the World Economy shows that bailout loans have accelerated between 2016 and 2021and that Beijing has granted 80% of its bailout loans (about USD 200 billion) in that period.
Around the world, BRI nations have been under stress as rising inflation and interest rates, compounded by the lingering impact of the Covid-19 virus pandemic, have eroded their ability to repay Debt.
The bailouts allow countries to expand their lending and remain solvent, according to the report.
China says more than 150 countries have joined the BRI, a trillion-dollar global infrastructure initiative launched by President Xi Jinping a decade ago.
Beijing says the initiative is intended to deepen friendly trade relations with other nations, especially in the developing world.
But critics have long accused China of luring low-income countries into debt traps by offering huge, unaffordable loans.
“China has developed a system of ‘Belt and Road bailouts’ that helps recipient countries avoid default and continue to pay their BRI debts, at least in the short term,” the report said.
Opacity
Compared to the International Monetary Fund and the huge liquidity support provided by the US Federal Reserve, China’s bailouts remain small, but they are growing fastaccording to the AidData report.
“Beijing has targeted a limited set of potential beneficiaries, as almost all Chinese bailout loans have gone to low- and middle-income BRI countries with significant outstanding debts to Chinese banks,” the authors wrote.
The report warned that Chinese loans tend to be more opaque compared to other international lenders of last resortand are often awarded to an average interest rate of five percentcompared to the typical two percent for an IMF loan.
Many of these agreements were the so-called “rollovers”, in which the same short-term loans are repeatedly extended to refinance maturing debt.
China’s foreign ministry responded to the criticism on Tuesday, accusing “some people” of “exaggerating so-called Chinese ‘debt traps’ and opaque lending, and dumping mud on China, something we absolutely do not accept.”
“China has never forced anyone to borrow moneyhas never forced any country to pay, will not impose any political conditions on loan agreements, and does not seek any political self-interest,” spokeswoman Mao Ning told a regular press briefing.
This month, China agreed to restructure its loans to Sri Lanka, clearing the way for the island nation’s bailout by the IMF, which counts Beijing as its biggest bilateral creditor.
In Latin America
For the region, Argentina is the country that has received the most, both in contracts and in amounts, according to data released in 2021 by AidData.
The country signed 10 contracts for a total of 8,574 million dollars, above Ecuador and more than double what Venezuela received.
(With information from AFP)
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Source-www.infobae.com