the volume of bad debts under the Chinese project “One Belt – One Road” has risen sharply – Kommersant
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During the pandemic, the volume of bad loans issued by China to developing countries under the One Belt, One Road project has more than quadrupled. Writes about it Nikkei with reference to the data of the analytical company Rhodium Group. Between 2020 and 2022, the volume of loans that had to be renegotiated or had to be written off rose to $76.8 billion between 2020 and 2022, according to her calculations. In the previous three years, such debt amounted to $17 billion. The worst year in this regard was 2020 — then bad debts were $48.7 billion. By 2022, they have dropped to $9 billion, but this is still almost three times higher than the pre-pandemic level.
As part of the Belt and Road Initiative, China is investing in infrastructure projects, including the construction of roads, railways, ports, etc., in Asia, Africa and Europe. According to the American Enterprise Institute, before the pandemic, China invested about $100 billion a year in the project, since 2020 this amount has decreased to $60-70 billion a year. According to experts, this is due, among other things, to the accumulation of bad debts.
Experts have previously noted the fact that loans under the One Belt, One Road project contribute to a significant increase in the debt of developing countries and their dependence on China. The accumulation of overdue loans in recent years has been facilitated, among other things, by the pandemic and related macroeconomic difficulties, economic slowdown, etc. According to analysts, China is unlikely to continue lending under the One Belt, One Road project in pre-pandemic volumes. “China will continue to use the Belt and Road to expand its influence and access to resources, while keeping its debt problems in mind. It can be expected that his investments will gradually grow, but it is difficult to imagine that they will return to their pre-covid peak,” said Yoshino Tamai, an analyst at the research institute of the Japanese corporation Itochu.
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