China spent $240 billion in aid to 22 developing countries between 2008 and 2021, according to a study released Tuesday, with the amount rising in recent years as many countries struggle to repay loans they spent on building infrastructure under the China Initiative. “Belt and Road”. .

The Belt and Road Initiative is the largest transnational infrastructure program in the world. The American Enterprise Institute, a Washington-based think tank, has estimated the cost of China-led infrastructure projects and other Belt and Road deals at $838 billion between 2013 and the end of 2021.

According to a report by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy, almost 80% of bailout loans were from 2016 to 2021, mostly to countries such as Argentina, Mongolia and Pakistan.

“Beijing is finally trying to bail out its banks. That’s why it got into the risky business of providing international bailouts,” said Carmen Reinhart, a former chief economist at the World Bank and one of the study’s authors.

China’s lending is “opaque and uncoordinated,” said Brad Parks, co-author of the report and director of the AidData research lab at the College of William and Mary in the US.

The study found that Chinese lending to indebted countries jumped from less than 5 percent of its foreign loan portfolio in 2010 to 60 percent in 2022.

In Argentina and Pakistan, the “lion’s share”

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

The People’s Bank of China (PBOC) swap line accounted for $170 billion in aid funding, including to Suriname, Sri Lanka and Egypt. Bridge loans or balance of payments support from Chinese state-owned banks amounted to $70 billion. The rollover of both types of loans amounted to $140 billion.

China is in debt restructuring talks with countries such as Zambia, Ghana and Sri Lanka and has been criticized for delaying the proceedings. In response, he called on the World Bank and the International Monetary Fund to also offer debt relief.

Chinese borrowing takes two forms. The first is through a “swap line” mechanism, where the yuan is issued by the People’s Bank of China, the central bank, in exchange for the national currency. About $170 billion was spent in this way. Second, through direct balance of payments support, with $70 billion pledged, mostly by state-owned Chinese banks.

As you know, there are also countries that protested the high cost of projects that joined the Belt and Road Initiative launched in 2013, while Western governments see this initiative as a way to spread Chinese influence abroad, burdening the poor strata of the population. countries with unsustainable debt.

Source: Reuters, Financial Times.