China's 'Belt and Road' program has cost $240 billion, says study

Robert Besser
31 Mar 2023, 14:25 GMT+10

A study published this week reported that China spent $240 billion between 2008 and 2021 to bail out 22 developing countries
These countries have struggled to repay loans spent on infrastructure as part of the "Belt and Road" Initiative
Almost 80 percent of the lending was made between 2016 and 2021, mainly to low-to-middle-income countries, such as Argentina, Mongolia and Pakistan

NEW YORK CITY, New York: A study published this week reported that China spent $240 billion between 2008 and 2021 to bail out 22 developing countries, which have struggled to repay loans spent on on infrastructure as part of the "Belt and Road" Initiative.

The report was conducted by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy.

Almost 80 percent of the lending was made between 2016 and 2021, mainly to low-to-middle-income countries, such as Argentina, Mongolia and Pakistan, the report showed.

As many Belt and Road projects have failed to pay their expected financial dividends, China's lending has tailed off since 2016.

"Beijing is ultimately trying to rescue its own banks. That's why it has gotten into the risky business of international bailout lending," said Carmen Reinhart, a former World Bank chief economist and one of the study's authors, as quoted by Reuters.

According to the study, Argentina received the highest amount in loans, at $111.8 billion, followed by Pakistan with $48.5 billion, and Egypt with $15.6 billion ,while nine countries received less than $1 billion.

The People's Bank of China's (PBOC) contributed $170 billion of the financing, including in Suriname, Sri Lanka and Egypt, it added, noting that bridge loans or balance of payments support by Chinese state-owned banks and companies was $70 billion, and rollovers of both types of loans totaled $140 billion.

"China's rescue lending is "opaque and uncoordinated," said Brad Parks, one of the report's authors and director of AidData, according to Reuters.

In response, the Chinese government stressed that its overseas investments operated on "the principle of openness and transparency."

At a news conference this week, foreign ministry spokesperson Mao Ning said, "China acts in accordance with market laws and international rules, respects the will of relevant countries, has never forced any party to borrow money, has never forced any country to pay, will not attach any political conditions to loan agreements, and does not seek any political self-interest."

China, which is negotiating debt restructurings with various countries, such as Zambia, Ghana and Sri Lanka, has been criticized for delaying the processes.