<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ China's rescue financing has soared China's rescue financing has soared (interactive) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Rachel Savage; Editing by Richard Chang)
By Rachel Savage
JOHANNESBURG, March 28 (Reuters) - China spent $240
billion bailing out 22 developing countries between 2008 and
2021, with the amount soaring in recent years as more have
struggled to repay loans spent building "Belt & Road"
infrastructure, according to a study published Tuesday.
Almost 80% of the rescue lending was made between 2016 and
2021, mainly to middle-income countries including Argentina,
Mongolia and Pakistan, according to the report by researchers
from the World Bank, Harvard Kennedy School, AidData and the
Kiel Institute for the World Economy.
China has lent hundreds of billions of dollars to build
infrastructure in developing countries, but lending has tailed
off since 2016 as many projects have failed to pay the expected
financial dividends.
"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.
Chinese loans to countries in debt distress soared from less
than 5% of its overseas lending portfolio in 2010 to 60% in
2022, the study found.
Argentina received the most, with $111.8 billion, followed
Pakistan on $48.5 billion and Egypt with $15.6 billion. Nine
countries received less than $1 billion.
People's Bank of China (PBOC) swap lines accounted for $170
billion of the rescue financing, including in Suriname, Sri
Lanka and Egypt. Bridge loans or balance of payments support by
Chinese state-owned banks was $70 billion. Rollovers of both
kinds of loan were $140 billion.
The study was critical of some central banks potentially
using the PBOC swap lines to artifically pump up their foreign
exchange reserve figures.
China's rescue lending is "opaque and uncoordinated," said
Brad Parks, one of the report's authors, and director of
AidData, a research lab at William & Mary College in the United
States.
The bailout loans are mainly concentrated in the middle
income countries that make up four-fifths of its lending, due to
the risk they pose to Chinese banks' balance sheets, whereas low
income countries are offered grace periods and maturity
extensions, the report said.
China is negotiating debt restructurings with countries
including Zambia, Ghana and Sri Lanka and has been criticised
for holding up the processes. In response, it has called on the
World Bank and International Monetary Fund to also offer debt
relief.
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