China spent $104 billion over five years on loans to bail out its debtors

Over 13 years (from 2008 to 2021), the PRC issued $240 billion worth of loans to 22 heavily indebted developing countries, sharply increasing lending since 2016 ($104 billion). The growth in lending since 2016 was driven by the need to service previously issued loans for infrastructure development under China’s Belt and Road Initiative announced in 2013, according to a report by the World Bank, Harvard Kennedy School, AidData and the Keele University Institute for World Economics, released March 28th.

Nearly 80% of rescue loans issued from 2016 to 2021 went to low- and middle-income countries, including Argentina, Mongolia and Pakistan, according to the report. In addition, China is currently negotiating debt restructuring with a number of countries, including Zambia, Ghana and Sri Lanka. According to Reuters, a number of Belt and Road projects, for which China has begun issuing loans since 2013, have not brought the expected benefits, including because of their unprofitability, problems with corruption and environmental problems. Among the striking examples are the unfinished “road to nowhere” in Montenegro from the port of Bar to the southern border of Serbia worth $1 billion, the unprofitable port of Hambantota (in 2017 it was leased to China for 99 years) and the Lotus TV tower in Sri Lanka, declared default in 2022. Now its debt to China has reached almost $7 billion, which is 52% of the total external debt.