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China’s Belt & Road Costs ‘Soared to $240bn Amid Bailouts’

Beijing spent $240 billion bailing out 22 developing countries that struggled to repay loans used to build Belt & Road projects from 2008 to 2021, a new study says

The China-Laos railway was a key Belt & Road scheme project
The China-Laos rail link is one of many Belt and Road projects that aim to bind the economies of Southeast Asia close to China. It left Laos saddled with huge debts but the country has enjoyed booming trade and tourist arrivals since it opened. Photo: Xinhua.

The cost of China’s Belt & Road infrastructure scheme has soared dramatically in recent years, a new study has revealed.

Beijing has spent close to a quarter of a trillion dollars – $240 billion – bailing out 22 developing countries that struggled to repay loans used to build Belt & Road projects between 2008 and 2021, a new study says.

Almost 80% of the rescue 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.



Debt distress in many states by 2022

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 Pakistan on $48.5 billion and Egypt with $15.6 billion. Nine countries received less than $1 billion.

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

The study was critical of some central banks potentially using the PBOC swap lines to artifically 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 William & Mary College in the United States.

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.


  • Reuters with additional editing by Jim Pollard





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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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