- Why in News- China has handed out $240 billion worth of bailout loans to 22 developing countries at risk of default over the past two decades, with the trend accelerating in recent years, a report said on Tuesday.
- Almost all the funds went to Belt and Road Initiative (BRI) countries such as Sri Lanka, Pakistan and Turkey — mostly low and middle income nations that have received Chinese loans for infrastructure development, according to the study.
- The 40 page report by the U.S.based research lab AidData, the WB, the Harvard Kennedy School and the Kiel Institute for the World Economy showed bailout loans had accelerated between 2016 and 2021, with Beijing doling out 80% of its rescue lending in that period.
- Around the world, BRI nations have come under strain as soaring inflation and interest rates, compounded by the lingering impact of the Covid19 pandemic, have hurt their ability to repay debts.
- China says more than 150 countries have signed up to the BRI, a trillion dollar global infrastructure push unveiled by President Xi Jinping a decade ago.
- Beijing says the initiative aims to deepen friendly trade relations with other nations. But critics have long accused China of luring lower income countries into debt traps.
- “China has developed a system of ‘Bailouts on the Belt and Road’ that helps recipient countries to avoid default, and continue servicing their BRI debts, at least in the short run,” the report said.
China’s Belt and Road Initiative (BRI)
- The China’s Belt and Road Initiative (BRI) is a global infrastructure development strategy adopted by the China in 2013.
- Aim: Build a trade, investment, and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes.
- Routes: New Silk Road Economic Belt: It encompasses trade and investment hubs to the north of China; by reaching out to Eurasia including a link via Myanmar to India.
- Maritime Silk Road: It begins via the South China Sea going towards Indo-China, South-East Asia and then around the Indian Ocean thus reaching Africa and Europe.
- China-Pakistan Economic Corridor (CPEC): It is a 3,000-km long route of infrastructure projects connecting China’s northwest Xinjiang Uygur Autonomous Region and the Gwadar Port in Baluchistan in Pakistan.
