China lent 240 billion dollars to save 22 countries

China spent $240 billion to bail out 22 developing countries between 2008 and 2021, according to a study published today.

This amount has skyrocketed in recent years as more countries have struggled to repay the loans they took out to build the Belt and Road infrastructure.

Nearly 80 percent of bailout loans went to middle-income countries like Argentina, Mongolia and Pakistan between 2016 and 2021, according to a report by researchers at the World Bank, the Harvard Kennedy School, AidData and the Kiel Institute.

‘THEY ARE TRYING TO SAVE THEIR OWN BANK’

Although China has borrowed hundreds of billions of dollars to build infrastructure in developing countries, lending has slowed since 2016 as many projects failed to make expected repayments.

“Beijing is ultimately trying to bail out its own banks,” said Carmen Reinhart, a former World Bank chief economist and one of the study’s authors. That is why he got into a risky business like an international bailout loan,” she said.

China’s loans to indebted countries amounted to 5 percent of its overseas loan portfolio in 2010, according to the study. However, this rate increased to 60 percent in 2022.

MOST OF THE MONEY GOES TO ARGENTINA

Argentina was the top recipient with $111.8 billion, followed by Pakistan with $48.5 billion and Egypt with $15.6 billion. Nine countries received less than a billion dollars.

Swap lines from the People’s Bank of China (PBOC) have covered $170 billion in bailout financing, including countries like Suriname, Sri Lanka and Egypt. The study also criticized some central banks that use PBOC clearing lines to artificially increase their foreign exchange reserves.

80 PERCENT TO MIDDLE-INCOME COUNTRIES

According to the report, bailout loans are concentrated in middle-income countries, which account for 80 percent of Chinese banks’ loans due to the risk they pose to their balance sheets, while low-income countries are offered deferred payment opportunities or expiration extensions.

China is also negotiating debt restructuring with countries like Zambia, Ghana and Sri Lanka.