Skip to content
Search

Latest Stories

China spent £194.97 billion rescuing 'Belt and Road Initiative' nations, says study

Argentina was the largest beneficiary, receiving £90.80bn, equivalent to $111.8bn, followed by Pakistan with £39.39 ($48.5bn) and Egypt with £12.67 ($15.6bn)

China spent £194.97 billion rescuing 'Belt and Road Initiative' nations, says study

A recent study published on Tuesday (28) revealed that China has allocated approximately £194.97 billion equivalent to about $240 billion in financial assistance to 22 developing nations from 2008 to 2021.

The amount has notably increased in recent years due to more countries experiencing difficulties in repaying loans related to the construction of "Belt and Road Initiative" (BRI) infrastructure.


Researchers from prominent institutions such as the World Bank, Harvard Kennedy School, AidData, and the Kiel Institute for the World Economy found that nearly 80 per cent of the lending occurred between 2016 and 2021, with the primary beneficiaries being middle-income countries such as Mongolia, Pakistan, and Argentina.

China has provided loans amounting to hundreds of billions of dollars for infrastructure development in developing countries. However, lending activity has declined since 2016 due to several projects failing to generate the anticipated financial returns.

"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.

BRI nations have faced financial strain due to high inflation and interest rates, compounded by the pandemic, making it hard to repay debts.

Countries have received bailouts to extend loans and remain solvent. China claims over 150 countries have joined the trillion-dollar BRI infrastructure initiative launched by President Xi Jinping ten years ago.

According to Beijing, the objective of the initiative is to strengthen friendly trade ties with other countries, especially those in the developing world.

However, critics have alleged that China entices lower-income nations into debt traps by providing massive, unsustainable loans.

Although smaller than the International Monetary Fund and the significant liquidity support provided by the US Federal Reserve, China's bailouts have rapidly increased, as indicated in the AidData report.

Argentina was the largest beneficiary, receiving £90.80bn, equivalent to $111.8bn, followed by Pakistan with £39.39 or $48.5bn and Egypt with £12.67 equalling $15.6bn. Nine nations received less than $1bn or £0.81bn.

The People's Bank of China's (PBOC) swap lines accounted for £138.10bn or $170bn of the financing, including in Suriname, Sri Lanka, and Egypt.

The authors of the report stated that "Beijing has targeted a limited set of potential recipients, as almost all Chinese rescue loans have gone to low- and middle-income BRI countries with significant debts outstanding to Chinese banks,".

The study cautioned that Chinese loans tend to be less transparent than other last-resort international lenders and often carry an average interest rate of 5 per cent, compared to the typical 2 per cent rate on an IMF loan.

The majority of such loans were "rollovers," with short-term loans being repeatedly extended to refinance upcoming debt obligations.

According to the report, Chinese state-owned banks and companies provided £56.86bn or $70bn in bridge loans or balance of payments support, while rollovers of both types of loans amounted to £113.72bn or $140bn.

China's government responded to the criticism, stating that its overseas investments were based on "openness and transparency" principles.

The foreign ministry spokesperson denied that China had compelled countries to borrow or repay loans and claimed that loan agreements were not linked to political self-interest.

However, China has been criticised for delaying debt restructurings with countries like Zambia, Ghana, and Sri Lanka.

(With inputs from agencies)

More For You

‘All options on the table’ as Britain
prepares for likelihood of US tariffs

Sir Keir Starmer with Jonathan Reynolds

‘All options on the table’ as Britain prepares for likelihood of US tariffs

BRITAIN is likely to be hit by US tariffs despite making “rapid progress” over a trade deal with Washington, prime minister Sir Keir Starmer said on Tuesday (1).

He spoke as US trading partners around the world braced for an expected fresh raft of tariffs from president Donald Trump, in addition to levies already imposed on steel and those set to take effect this week on cars.

Keep ReadingShow less
single-use vapes-iStock

Analysis by Material Focus estimates that 8.2 million vapes are discarded or littered each week in the UK—equivalent to 13 every second. (Representational image: iStock)

iStock

Shops told to clear single-use vapes before ban starts on June 1

SHOPS across the UK have until 1 June 2025 to sell off remaining stocks of single-use vapes before a nationwide ban comes into force.

The legislation, confirmed last year, follows a government consultation that showed strong support for restricting their sale and supply.

Keep ReadingShow less
Primark-London-Getty

During his 15-year tenure, Marchant expanded Primark’s store network to more than 450 locations across 17 countries in Europe and the United States. (Photo: Reuters)

Primark chief Paul Marchant steps down after misconduct probe

PAUL MARCHANT, the head of fashion retailer Primark, has resigned with immediate effect after admitting to an "error of judgment" in his behaviour towards a woman in a social setting.

Associated British Foods (AB Foods), Primark's parent company, announced his resignation on Monday.

Keep ReadingShow less
Jaguar’s bold gamble: Can it woo young, wealthy drivers with a £123k EV?

Jaguar’s bold gamble: Can it woo young, wealthy drivers with a £123k EV?

JAGUAR’S ambition to seduce younger, richer drivers was on full display in Paris with a presentation of its newest prototype, the Type 00, which promises all-electric luxury... at a steep price.

The low-slung, muscular-looking concept car presented to European reporters last Friday (21) prefigures a production model expected mid-2026 at a base cost of €150,000 (£123,472.8).

Keep ReadingShow less
Starmer-Trump-Getty

Trump has suggested the possibility of a 'great' trade deal that could help the UK mitigate the impact of tariffs he has pledged to introduce. (Photo: Getty Images)

Starmer, Trump talk trade deal progress in 'productive' discussion

KEIR STARMER and Donald Trump spoke on Sunday about ongoing UK-US trade negotiations, with Downing Street describing the talks as "productive."

Since leaving the European Union, the UK has been working to secure a trade agreement with the United States. Successive British governments have pursued a deal, but it has remained elusive.

Keep ReadingShow less