Chinese financial institutions lent $1.34 trillion to developing countries from 2000 to 2021, U.S. researchers at AidData said in a report that showed the world’s biggest bilateral lender switching from infrastructure to rescue lending.
While lending commitments peaked at almost $136 billion in 2016, China still committed to almost $80 billion of loans and grants in 2021 according to the data, which captures almost 21,000 projects in 165 low and middle-income countries as probably the most comprehensive dataset of its type.
This is similar to Red China and its aid to countries. However, their Belt and Road Initiative has hit a bit of a wall as the countries are defaulting. China is looking to jump in and refinance, but they are stretched thin with their economy and banking taking a hit. See Reuters’ story from Nov. 6, 2023 –China lent $1.34 trln in 2000-2021, focus shifts from Belt and Road to rescue finance-report
In 2021, the lion’s share of lending, more than half, came from the People’s Bank of China and the State Administration of Foreign Exchange (SAFE), primarily directed toward bailout funding. AidData’s report from the research lab at William and Mary University aptly described Beijing’s evolving role as “the world’s largest official debt collector,” a role that has been both unfamiliar and uncomfortable for the Chinese government.
China’s overseas financial endeavors have not only garnered allies in the developing world but have also drawn criticism from Western nations and some recipient countries like Sri Lanka and Zambia. These criticisms often revolve around infrastructure projects funded by China, which, despite their initial promise, left these nations burdened with debt they struggled to repay.
The data further reveals a shift in both the sources and focus of China’s overseas financing. In 2013, when President Xi Jinping launched the Belt and Road Initiative aimed at constructing infrastructure in developing regions, China’s policy banks were responsible for over half of the lending. However, their share in this endeavor has steadily declined since 2015, reaching just 22% by 2021. This transformation underscores China’s changing approach to its international financial engagements.