May 02, 2018
From the article:
With power comes responsibility. China is already a great power, not least as a lender for development, notably in support of President Xi Jinping’s Belt and Road Initiative. Chinese institutions and multilateral bodies under its influence have become significant creditors of emerging and developing countries. This role can only grow. How China handles it, not least how well it co-ordinates the management of lending and debt relief with the traditional creditors is increasingly important.
...How large are the risks? Two features of what is now happening matter.First, Chinese lending is enormous. By the end of 2014, just two Chinese policy banks — the China Development Bank and Export-Import Bank of China had outstanding loans to foreign borrowers of nearly $700bn, much the same as the total outstanding lending of the World Bank and six regional development institutions. China has also set up two multilateral development banks — the Asian Infrastructure Investment Bank and the New Development Bank.
Second, as a study from the Center for Global Development notes, 23 of the 68 countries potentially eligible for lending under the Belt and Road Initiative are vulnerable to debt distress. In eight of these countries — Pakistan, Djibouti, Maldives, Laos, Mongolia, Montenegro, Tajikistan and Kyrgyzstan — the lending associated with the Belt and Road Initiative will add substantially to the risks.