China Emerges as New Global Heavyweight Lender with $240bn in Bailouts for Developing Countries
China has spent $240bn bailing out 22 developing countries between 2008 and 2021, with the amount soaring in recent years as more have struggled to repay loans spent building “Belt & Road” infrastructure, according to a study by researchers from the World Bank, Harvard Kennedy School, Kiel Institute for the World Economy and the US-based research lab AidData.[0] 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.[0] Grace periods and maturity extensions are granted to low-income nations, while middle-income nations are deemed a hazard to the financial stability of Chinese banks.[1] China typically offers rescue loans with an average interest rate of 5%, more than double the rate typically provided by the IMF.[2] The US and International Monetary Funding have for decades been the globe’s lenders of last resort, stepping in to provide emergency loans to countries in financial distress.[3] But a new study shows how China has emerged as a new global heavyweight.[3]
0. “China spent US$240 billion bailing out ‘Belt & Road' countries: Study” CNA, 27 Mar. 2023, https://www.channelnewsasia.com/asia/china-belt-and-road-countries-bailout-loans-debt-3378326
1. “Belt and Road Initiative in Jeopardy: China spent $240 billion baling out BRI countries” Organiser, 28 Mar. 2023, https://organiser.org/2023/03/28/166819/world/belt-and-road-initiative-in-jeopardy-china-spent-240-billion-baling-out-bri-countries
2. “China gave huge loans to Belt and Road countries. Now it's spending billions to bail them out” KTVZ, 28 Mar. 2023, https://ktvz.com/news/2023/03/28/china-gave-huge-loans-to-belt-and-road-countries-now-its-spending-billions-to-bail-them-out/
3. “How China Became a Global Lender of Last Resort” TIME, 28 Mar. 2023, https://time.com/6266658/china-emerges-major-global-lender/
