Developing countries owe Chinese lenders at least $1.1 trillion dollars, according to a new data analysis published Monday, which says more than half of the thousands of loans China has doled out over two decades are due as many borrowers struggle financially.
Developing countries owe Chinese lenders at least $1.1 trillion, according to a new data analysis published Monday, which says more than half of the thousands of loans China has doled out over two decades are due as many borrowers struggle financially.
Overdue loan repayments to Chinese lenders are soaring, according to AidData, a university research lab at William & Mary in Virginia, which found that nearly 80% of China’s lending portfolio in the developing world is currently supporting countries in financial distress.
For years, Beijing marshalled its finances toward funding infrastructure across poorer countries – including under an effort that Chinese leader Xi Jinping branded as his flagship “Belt and Road Initiative,” which launched a decade ago this fall.
That funding flowed liberally into roads, airports, railways and power plants from Latin America to Southeast Asia and helped power economic growth among borrowing countries. Along the way, it drew many governments closer to Beijing and made China the world’s largest creditor, while also sparking accusations of irresponsible lending.
Which they are more then free to deploy.... at a cost.
Sadly any country is going to have to weigh the cost of war, the cost of losing that war, the cost of losing personnel/equipment in that war, and the cost of basically ruining the physical assets they are trying to collect due to sabotage, collateral damage, misfires, and "misappropriation."
Sadly by the time they are done, the market value of those assets would be purely theoretical at best, if any value at all.
So it doesn't make sense for a country like China to invade the greater portion of Africa. But they might try sting operations, or devaluing of African assets within their own market to put pressure.
The risks being that the "belt and road" initiative might fall through too whatever the choice.
More like if you owe the mob $100 and you fail to pay, you might get a broken finger. If you owe the mob $1 million and fail to pay they will gift you cement boots.
Is this actually true. The more someone owes the less likely you are to outright kill them cause that's a 100% loss on your investment. Brutal torture or kidnappings seem more likely to me. After that organ harvesting or forfitting assets.
I don't know whether this should be hastily dismissed as "FUD": Do you want to live in a world where all of your country's critical infrastructure is owned by Chinese state-owned corporations as soon as your government can no longer service its loans to Beijing?
... The situation is certainly not entirely comparable, but since the start of the Russian war of aggression against Ukraine, we have seen the problems Germany has had with the fact that its gas storage facilities belong to Gazprom...
If china doesn't get its money asap they're gonna start doing abrasive, risky aerospace maneuvers over international waters and forcing uighur slave labor to produce fast fashion.
Great jokes and all, but the Belt and Road Initiative has been a pretty smart and successful tactical move to consolidate soft power in Africa and other developing regions, and ensuring that their governments are beholden to Beijing for the foreseeable future.
And they did it all without mobilizing a single troop, but rather by making people's lives better.
Not a fan of China, and it's obvious that the Belt and Road Initiative is 100% a debt trap, but I gotta give them credit for pulling it off.
This is definitely much deeper into the grey zone than the US's (or "the West" in general) past dalliances in colonialism which were far more black and white, and straight up horrific
Wait until I tell you that the US is indebted to Japan for that same amount ($1.1T) and to China for nearly that amount ($0.9T). Sure it's a bigger portion of the available funds in the developing world, but on the scale of superpowers, it's not so much.
The difference is leverage. Having $0.9T of US treasury bonds does not give China much leverage over the US because those would likely be absorbed by other countries fairly easily. Yeah, the dollar's value would likely dip a tiny bit but nothing catastrophic. That is much different than China having a large chunk of a developing nation's debt. Developing nations constantly have issues getting decent terms on their loans so if China up and says they will not roll the loans over into a new one, the country likely has to try to finance the debt at a much higher interest rate or have lots of strings attached. China has much more leverage in these cases.
This is the part where the liberals assure me China's evil plan of checks notes helping build infrastructure in the areas of the world ruined by colonialism while using a more generous lending scheme than the competition leads to them annexing half of Africa, somehow.
I think in many cases China takes control of the infrastructure they built since the countries miss payments.
This was widely predicted to be the Chinese strategy: make loans to countries they knew could not pay with favorable terms for China when the country defaults.
It's obviously been a debt trap from the start. Is anyone really naive enough to think China was building up Africa's infrastructure out of the kindness of their hearts?
It happened in Sri Lanka a while ago. China financed the construction of a new deep water port. The port is finished, but Sri Lanka can't service the debt so the new port is now under China's control (99 years lease agreement).
Oof. I wonder how that will work in the case of infrastructure like roads and bridges--long term tolls? At some point it has to eat away at whatever good will the Chinese were trying to buy.