China’s massive lending to developing countries has increased the burden and debt servicing problems of a number of governments, raising the risk of massive default.
The World Bank report notes that the main difference between Chinese loans and regular loans is that they are provided on behalf of state-owned banks, secrecy is required of borrowers, and late payments, which are technically a default, are settled secretly and without publicity. At the same time, most often defaults are caused by Chinese loans.
Over the past 20 years, Chinese state-owned banks have become the largest creditors of developing countries. However, the criteria for religion remained opaque. More than half of the loans are never reported in official statistics, which makes it difficult to analyze these debts.
The authors of the report note that the lending boom is over, but debt repayment problems have led to defaults and ongoing restructuring, when debt service conditions change several times.
Of the 73 countries that qualified for debt relief early in the pandemic, more than half are still struggling financially. At the same time, Chinese banks behave like Western countries in the 80s: the “body” of debt is practically not written off, and deferred payment is preferred. At the same time, the problem of high debt burden has not been solved in any way.
In mid-January, it was reported that the Chinese economy, according to its official statistics, is recovering faster than the US economy.
Growth over the past year – 8.1%. Experts do not exclude that in 2028 China may become a leader in terms of GDP and other economic indicators.