Original Article By Dylan Housman At DailyCaller.com:
The Chinese Communist Party (CCP) is spending hundreds of billions of dollars to bail out countries it lured into debt traps with the promise of advanced infrastructure projects, according to a new study.
Beijing has spent $240 billion between 2008 and 2021 on emergency rescue loans in developing countries, almost all of which took on significant debt as part of its “Belt and Road” initiative, according to the new study from the College of William & Mary’s AidData. Beijing is using its power as an emergency lender to rival the financial dominance of the United States, according to the researchers from AidData, the World Bank, the Kiel Institute for the World Economy and Harvard’s Kennedy School.
Twenty-two countries were bailed out during that 13-year time span by China, according to the study, including Argentina, Kenya, Turkey and Pakistan. China isn’t the world’s biggest lender — those remain the United States and the International Monetary Fund — however, it is unique in bailing out countries that it sells infrastructure projects to with high-interest loans.
Beijing’s approach is similar to that used by the United States in past decades, the researchers wrote, which notably bailed out numerous Latin American countries during the 1980s debt crisis. However, China’s loans differ in a critical way by coming with interest rates as high as 5%, more than double the 2% used for IMF rescue loans.
The lending process from China is also “less institutionalized” and “less transparent” than similar programs, the study found. The CCP institutions doing the lending do not provide public data on their deals.
Of the $240 billion loaned in more than a decade, $70 billion came from Chinese state-owned banks and industries, like oil and gas companies. “Beijing is ultimately trying to rescue its own banks. That’s why it has gotten into the risky business of international bailout lending,” study co-author Carmen Reinhart wrote.
China’s Belt and Road initiative is viewed as the cornerstone of President Xi Jinping’s foreign policy. More than $1 billion has been invested in the project, which builds infrastructure from railways to dams to power plants in almost 140 countries around the world, according to estimates. Critics of the initiative have called it a “debt trap” and numerous projects are beginning to stall or fall apart shortly after being built.
Chinese Foreign Minister Qin Gang flipped the accusations of debt entrapment back on the United States, blaming American interest rate hikes for worsening debt around the world. “China should be the last one to be accused of the so-called debt trap,” he said this month.
