China spent $240 billion bailing out ‘BRI countries’ including Pakistan: report

Argentina received the most, with $111.8b, followed by Pakistan with $48.5b, shows study


Reuters March 28, 2023
NDRC spokesperson says the CPEC has made significant progress, as expressways, vocational schools and power plants funded by China have been put into operation in Pakistan. PHOTO: REUTERS/FILE

JOHANNESBURG:

China spent $240 billion bailing out 22 developing countries between 2008 and 2021, with the amount soaring in recent years as more have struggled to repay loans spent building "Belt and Road" infrastructure, a study published on Tuesday showed.

Almost 80% of the lending was made between 2016 and 2021, mainly to middle-income countries including Argentina, Mongolia and Pakistan, according to the report by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy.

China has lent hundreds of billions of dollars to build infrastructure in developing countries, but lending has tailed off since 2016 as many projects have failed to pay the expected financial dividends.

"Beijing is ultimately trying to rescue its own banks. That's why it has gotten into the risky business of international bailout lending," said Carmen Reinhart, a former World Bank chief economist and one of the study's authors.

Chinese loans to countries in debt distress soared from less than 5% of its overseas lending portfolio in 2010 to 60% in 2022, the study found.

Argentina received the most, with $111.8 billion, followed by Pakistan with $48.5 billion and Egypt with $15.6 billion. Nine countries received less than $1 billion.

Also read: US concerned about debt Pakistan owes China, says official

The People's Bank of China's (PBOC) swap lines accounted for $170 billion of the financing, including in Suriname, Sri Lanka and Egypt. Bridge loans or balance of payments support by Chinese state-owned banks and companies was $70 billion. Rollovers of both kinds of loans were $140 billion.

The study was critical of some central banks potentially using the PBOC swap lines to artificially pump up their foreign exchange reserve figures.

China's rescue lending is "opaque and uncoordinated," said Brad Parks, one of the report's authors, and director of AidData, a research lab at The College of William & Mary in the United States.

China's government hit back at the criticism, saying its overseas investments operated on "the principle of openness and transparency".

"China acts in accordance with market laws and international rules, respects the will of relevant countries, has never forced any party to borrow money, has never forced any country to pay, will not attach any political conditions to loan agreements, and does not seek any political self-interest," foreign ministry spokesperson Mao Ning said at a news conference on Tuesday.

Also read: China rejects ‘debt trap’ western narrative

The bailout loans are mainly concentrated in the middle income countries that make up four-fifths of its lending, due to the risk they pose to Chinese banks' balance sheets, whereas low income countries are offered grace periods and maturity extensions, the report said.

China is negotiating debt restructurings with countries including Zambia, Ghana and Sri Lanka and has been criticised for holding up the processes. In response, it has called on the World Bank and International Monetary Fund to also offer debt relief.

COMMENTS (1)

test | 1 year ago | Reply The only thing we can give to China is respect in return for industry manufacturing and technology transfer. China has my word. If China moves its factories manufacturing facilities and industrial units to Pakistan then we must give China military air and naval bases to further cement our brotherhood and friendship. For example United States has moved a lot lot of its businesses to India while there is not a single american factory operating in Pakistan. I repeat not a single american factory is operating in Pakistan and this gives China a revolutionary advantage to have naval air and military bases in Pakistan in return for industry manufacturing and technology transfer. Of course China is was and will always stand with Pakistan no matter what. Let me reiterate that no one should give Pakistan a single dollar to any government and if any country want to give anything to Pakistan then it must be technology manufacturing facilities and industries to Pakistan because all the loan aid bailout world bank asian development bank and imf these are all for elite class lavish lifestyle. The only thing which is good and which will always be good is industry it is a gift by other countries like China for for the common people who truly represent our Pakistan not some stupid elite. All the political parties are made of elite no one is clean in a country which is going downward keep that in mind. Its the elite who control media conglomerates armed forces judiciary policy making and all the dollars etc.
Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ