Developing countries owe Chinese lenders at least $1.1 trillion, according to a new data analysis published Monday, which says more than half of the thousands of loans China has doled out over two decades are due as many borrowers struggle financially.
Overdue loan repayments to Chinese lenders are soaring, according to AidData, a university research lab at William & Mary in Virginia, which found that nearly 80% of China’s lending portfolio in the developing world is currently supporting countries in financial distress.
For years, Beijing marshalled its finances toward funding infrastructure across poorer countries – including under an effort that Chinese leader Xi Jinping branded as his flagship “Belt and Road Initiative,” which launched a decade ago this fall.
That funding flowed liberally into roads, airports, railways and power plants from Latin America to Southeast Asia and helped power economic growth among borrowing countries. Along the way, it drew many governments closer to Beijing and made China the world’s largest creditor, while also sparking accusations of irresponsible lending.
If you owe the bank $100, that’s your problem. If you owe the bank $1.1 trillion, that’s the bank’s problem.
Which they are more then free to deploy… at a cost.
Sadly any country is going to have to weigh the cost of war, the cost of losing that war, the cost of losing personnel/equipment in that war, and the cost of basically ruining the physical assets they are trying to collect due to sabotage, collateral damage, misfires, and “misappropriation.”
Sadly by the time they are done, the market value of those assets would be purely theoretical at best, if any value at all.
So it doesn’t make sense for a country like China to invade the greater portion of Africa. But they might try sting operations, or devaluing of African assets within their own market to put pressure.
The risks being that the “belt and road” initiative might fall through too whatever the choice.
China don’t need to deploy their army. They can simply threaten to cease all trades. No countries can afford to stop trading with China since practically everything are manufactured there. Even Taiwan, China’s mortal enemy, still trades with China.
More like if you owe the mob $100 and you fail to pay, you might get a broken finger. If you owe the mob $1 million and fail to pay they will gift you cement boots.
Is this actually true. The more someone owes the less likely you are to outright kill them cause that’s a 100% loss on your investment. Brutal torture or kidnappings seem more likely to me. After that organ harvesting or forfitting assets.
Outside of the movies? Not really. Not actually sure of the change in death rates in owing a small amount vs a large amount but loan sharks breaking limbs borrowers’ or offing was actually pretty rare from what Steven Dubner or Leavitt found (can’t remember which). Although my great uncle Michael might disagree with that finding. But nobody has seen him since he did not pay back that large loan he took from the mob in the 70s.
That said, there are other ways to put pressure on a borrower that do not permanently decrease productivity. A borrower has a bigger incentive to pay things back if a loved one’s life is on the line. That might explain great uncle Michael’s disappearance since he was pretty much disowned by the rest of the family.
Well the accusations of irresponsible lending are just American fud… that money was a diplomatic expenditure.
But China seeking to aggressively recoup it does speak of economic desperation.
I don’t know whether this should be hastily dismissed as “FUD”: Do you want to live in a world where all of your country’s critical infrastructure is owned by Chinese state-owned corporations as soon as your government can no longer service its loans to Beijing?
… The situation is certainly not entirely comparable, but since the start of the Russian war of aggression against Ukraine, we have seen the problems Germany has had with the fact that its gas storage facilities belong to Gazprom…
Aggressively recouping your over leveraged junk loans is indication of economic health?
If china doesn’t get its money asap they’re gonna start doing abrasive, risky aerospace maneuvers over international waters and forcing uighur slave labor to produce fast fashion.
Great jokes and all, but the Belt and Road Initiative has been a pretty smart and successful tactical move to consolidate soft power in Africa and other developing regions, and ensuring that their governments are beholden to Beijing for the foreseeable future.
And they did it all without mobilizing a single troop, but rather by making people’s lives better.
Not a fan of China, and it’s obvious that the Belt and Road Initiative is 100% a debt trap, but I gotta give them credit for pulling it off.
This is definitely much deeper into the grey zone than the US’s (or “the West” in general) past dalliances in colonialism which were far more black and white, and straight up horrific
I hope no one pays them
Gonna see Chinese junk bonds hitting the shelves at Walmart… Lol
