(Adds China government response)
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 and Road"
infrastructure, a study published on Tuesday showed.
Almost 80% of the 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
by Pakistan with $48.5 billion and Egypt with $15.6 billion.
Nine countries received less than $1 billion.
The People's Bank of China's (PBOC) swap lines accounted for
$170 billion of the financing, including in Suriname, Sri Lanka
and Egypt. Bridge loans or balance of payments support by
Chinese state-owned banks and companies was $70 billion.
Rollovers of both kinds of loans 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 The College of William & Mary in the
United States.
China's government hit back at the criticism, saying its
overseas investments operated on "the principle of openness and
transparency".
"China acts in accordance with market laws and international
rules, respects the will of relevant countries, has never forced
any party to borrow money, has never forced any country to pay,
will not attach any political conditions to loan agreements, and
does not seek any political self-interest," foreign ministry
spokesperson Mao Ning said at a news conference on Tuesday.
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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China's rescue financing has soared China's rescue financing has soared (interactive) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Rachel Savage; Additional reporting by Laurie
Chen in Beijing; Editing by Richard Chang and Jacqueline Wong)
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