China's £17 billion debt demand strains world's poorest nations
This year, the 75 poorest countries will have to repay £17 billion in debt to the People's Republic of China. This is the result of loans granted as part of the Belt and Road Initiative, according to a report published on Tuesday by the Australian think tank Lowy Institute.
The Belt and Road Initiative is a project under which China provides loans for infrastructure investments, such as building schools, bridges, and hospitals. Since 2016, China has become a leader in the bilateral loan market, surpassing £39 billion, exceeding the total value of loans provided by Western countries.
The Australian think tank Lowy Institute published a report revealing that the world's 75 poorest countries are facing the need to repay £17 billion in debt to China this year. Most of these loans were granted as part of the Belt and Road Initiative, created by Chinese leader Xi Jinping.
According to the think tank, the total value of debt of 75 countries to China currently stands at £27 billion. The authors of the report predict that by the end of the decade, Beijing will be more of a debt collector than a banker for developing countries.
Lack of transparency
The People's Republic of China continues to issue new loans, including to Honduras, Nicaragua, and the Solomon Islands. These countries have cut diplomatic ties with Taiwan and established relations with Beijing.
China continues to finance some of its strategic partners, including Pakistan, Kazakhstan, Laos, and Mongolia. Among the borrowers are also countries that extract key minerals and metals necessary for the production of batteries and accumulators. These include Argentina, Brazil, and Indonesia.
The report emphasises that China publishes very little data concerning the Belt and Road Initiative. The American institute AidData estimated in 2021 that 165 countries worldwide owe China at least £299 billion.
