Studies have shown that as many countries are unable to repay the infrastructure loans for the Belt and Road Initiative, China has spent 7.2 trillion in emergency aid to 22 developing countries.
(Bloomberg file photo)
[Financial Channel/Comprehensive Report] A study released on Tuesday (28th) showed that China spent US$240 billion (about NT$7.2 trillion) to rescue 22 developing countries from 2008 to 2021. More and more countries have not repaid the loans for infrastructure construction along the Belt and Road, and China's emergency support to these countries has increased significantly.
According to comprehensive foreign media reports, China promotes the Belt and Road Initiative and has provided hundreds of billions of dollars in infrastructure loans to developing countries. These countries have borrowed from Chinese banks to provide funds for infrastructure construction such as roads, railways, and bridges. Countries are insolvent, lending to new projects has slowed since 2016, and 22 countries have received some form of bailout from China.
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According to a report by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy, China's opaque aid to struggling borrowers The scale means that Beijing has effectively established a new system of international bailout loans alongside the International Monetary Fund (IMF) and other Western institutions.
China's increased lending to struggling countries has spared borrowers from painful economic reforms, but the actions may have prolonged the countries' woes, researchers said.
And opaque terms surrounding the Chinese loans could also complicate debt relief efforts by obscuring the countries' true financial positions.
Carmen Reinhart, a former chief economist at the World Bank and one of the authors of the study, said Beijing was ultimately trying to save its own banks, which was the main reason they got into the risky business of international bailout loans.
According to reports, in 2011, China provided US$1 billion (approximately NT$30.2 billion) in aid financing in the form of loans, loan extensions, and currency swap agreements, rising to US$9 billion (approximately NT$272.6 billion) in 2014, and In 2020, the figure is US$30.7 billion (approximately NT$930 billion).
In the 10 years to 2021, China has provided these borrowing countries with a total of approximately US$232 billion (approximately NT$7 trillion) in emergency assistance, of which US$172 billion (approximately NT$5.2 trillion) is through the swap line of the People’s Bank of China, and another 600 million billion US dollars (approximately NT$1.8 trillion) is provided by Chinese banks in the form of aid loans and loan extensions.
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