Country, estimated to be owed up to $1.5trn, is increasing penalties for late payments and cutting back on infrastructure projects

Country, estimated to be owed up to $1.5trn, is increasing penalties for late payments and cutting back on infrastructure projects

China has become the world’s biggest debt collector, as the money it is owed from developing countries has surged to between $1.1tn (£889bn) and $1.5tn, according to a new report. An estimated 80% of China’s overseas lending portfolio in the global south is now supporting countries in financial distress.

Since 2017, China has been the world’s biggest bilateral lender; its main development banks issued nearly $500bn between 2008 and 2021. While some of this predates the belt and road initiative (BRI), Beijing’s flagship development programme has mobilised much of the investment in developing countries.

But a new report by researchers at the AidData research lab at William & Mary, a public university in Virginia, found that China, the world’s second largest economy, is now navigating the role of international debt collector as well as being a bilateral funder of major infrastructure projects.

  • Why9@lemmy.worldEnglish
    7·
    8 months ago

    When politics stopped being about helping the country and became more about point scoring and massaging one’s own reputation, it became a breeding ground for wealthy countries like China to swoop in as a lifeline.

    What do I mean?

    Well, imagine you’re a country struggling financially. The new president is sworn in, promising an infrastructure reform, more jobs and prosperity to the country.

    The president then sells the country to China and China comes over and starts developing their infrastructure, builds hospitals and creates a lot more jobs. The president gets hailed as a turning point for the country, the end of corruption. They end their term, get set up for the rest of their life with money, protection etc.

    Then, the next president takes the job, and China says it’s time to pay up. The guy who just sat in his new fancy chair has no idea what deals the previous president made, and realises the previous president made a deal with the devil, sorted themselves out and is leaving the cleanup to the next guy.

    Is there a way out? No, not really. It’s less about whether you owe money and more about who you owe it to. IMO owing a particular country is never a good idea because you could find relations break down between your country and the country you owe and suddenly that debt comes with a side serving of pain.

      • Why9@lemmy.worldEnglish
        1·
        8 months ago

        Usually when countries are founded.

        Like, imagine a country living under oppression finally gains their independence and can govern themselves. Everyone alive in that country knows how bad things were and the leader they elect promises that they will no longer have to worry.

        Sure they have their challenges but they get on with it and they make it work.

        The person who becomes the leader 3 generations later? To them it’s just a way to gain power, make money and do what they want. They have no idea how people felt when they were being oppressed, and how desperately they wanted to be liberated.

        One of my favourite quotes by G. Michael Hopf summarises this perfectly:

        Hard times create strong men.
        Strong men create good times.
        Good times create weak men.
        And, weak men create hard times.