BRI: China has become the Most Indebted Country in the World
China BRI project has become the world’s largest creditor, having issued more than a trillion dollars in debt for its Belt and Road (BRI)project alone. According to a report published in the Dawn newspaper this week, it has been revealed that Chinese loans account for an estimated 80% of the funds given to help countries in financial crisis. Beijing says more than 150 countries, from Uruguay to Sri Lanka, have signed up for its BRI initiative. The massive global infrastructure project was launch by President Xi Jinping a decade ago.
International Development Research Lab
During the first decade under this plan, China distributed huge loans to low- and middle-income countries to build bridges, ports, and highways. According to a report released earlier this week by EdData, an international development research lab at the College of William and Mary in the US state of Virginia, more than half of these loans are now in their repayment period.
Beijing has pledged $80 billion in aid and credit annually to low- and middle-income countries, according to data compiled on Chinese financing of nearly 21,000 projects in 165 countries. On the contrary, America has provided 60 billion dollars annually to such countries. As the world’s largest public lender, China is moving towards an unrecognizable and uncomfortable role, the report said. The actual amount is at least $1.1 trillion.
China’s Standing among Developing Nations
Additionally, according to AidData, China’s standing among developing nations has decline recently. With its approval rating dropping from 56% in 2019 to 40% in 2021. Beijing emphasize that by aligning its financing practices with global norms. It hopes to reduce the risk associate with the BRI. However, it said that “increasingly stringent safeguards to shield itself. From the risk of not being repaid” also among those strategies. This includes enabling important BRI lenders to “unilaterally sweep.” The foreign exchange reserves held in escrow. By borrowers in order to cover their principal and interest obligations.
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