$385bn of China's Belt and Road lending kept undisclosed: report

Froggy

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https://asia.nikkei.com/Spotlight/B...1&pub_date=20210929190000&seq_num=11&si=44594

$385bn of China's Belt and Road lending kept undisclosed: report
Beijing's loans to Pakistan cost 3.76% interest, while Western peers offer 1.1%

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China systematically underreports its debt to the World Bank's Debtor Reporting System by lending money through special purpose vehicles, a study reveals. (Source photos by AP and Reuters)
ADNAN AAMIR, Contributing writerSeptember 29, 2021 14:16 JSTUpdated on September 29, 2021 20:22 JST

KARACHI -- A staggering $385 billion of Chinese debt to other countries has been hidden from the World Bank and IMF thanks to the way the loans are structured, U.S.-based AidData said on Wednesday in its latest version of the Global Chinese Official Finance Dataset. The report also alleges that a major portion of Chinese development financing in Pakistan is composed of expensive loans.

The AidData report claims Beijing has made its overseas development finance nontransparent. It says that China systematically underreports its debt to the World Bank's Debtor Reporting System by lending money to private companies in lower middle income countries by using special purpose vehicles (SPVs), rather than to state institutions.

This makes it difficult for debtors and multilateral lenders to assess the costs and benefits of participating in the Belt and Road Initiative. It also heightens the possibility of debtors falling into debt traps with only one way to climb out: by selling geopolitically important assets to China.

The report further says that due to debt spending by China under the banner of the Belt and Road Initiative, 42 countries now have levels of public debt exposure to China in
excess of 10% of GDP. For instance, the China Exim Bank-financed China-Laos railway project, valued at $5.9 billion -- equivalent to roughly one-third of Laos' GDP -- is funded exclusively with hidden debt.

Bradley C. Parks, executive director of AidData at the College of William and Mary, said the World Bank and the IMF are already aware of this problem. He told Nikkei Asia that this new report has quantified the scale of the problem.


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"We estimate that an average government is underreporting its actual and potential repayment obligations to China by an amount that is equivalent to 5.8% of its GDP, based on individual underreporting estimates for 165 countries," said Parks, who is also one of the co-authors of the report.

The report also makes some interesting revelations about Chinese development financing in Pakistan in the context of the China-Pakistan Economic Corridor (CPEC), the $50 billion Pakistan component of Belt and Road.

As per the report, between 2000 and 2017, China made total commitments worth $34.3 billion for development financing in Pakistan, out of which at least $27.8 billion has been official commercial-like loans with limited concessions.


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This report also says Chinese loans to Pakistan are expensive compared to loans provided by Organization for Economic Cooperation and Development's Development Assistance Committee (OECD-DAC) and multilateral creditors to Pakistan. The average Chinese loan to Pakistan, it says, has an interest rate of 3.76%, a maturity period of 13.2 years and a grace period of 4.3 years.

"As a point of comparison, a typical loan from an OECD-DAC lender like Germany, France or Japan carries a 1.1% interest rate and a repayment period of 28 years, much generous than what China has offered to Islamabad," Ammar Malik, a senior AidData research scientist who leads the Tracking Underreported Financial Flows program, told Nikkei.

Despite the high cost, lower-middle-income countries like Pakistan accept the loans offered by China to private entities in their countries. Experts believe that these countries accept the loans because they do not appear in their balance sheets.


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The Yuxi-Mohan railway between China and Laos under construction in May 2019 in China's Yunnan Province. © Getty Images

"Borrowing via special purpose vehicles and joint ventures -- under off-balance sheet arrangements -- provides a way for a low-income or middle-income government to facilitate the implementation of large public infrastructure projects without going red in terms of debt limits," Parks said.

While the AidData report is based on data available till 2017, experts believe that there have not been any major changes in the pricing of loans from public institutions in China. "Beijing's state-owned banks have consistently given priority to profitable, revenue-generating projects. Chinese state-owned banks are yield-maximizing surrogates of the state," Parks said.

Despite the release of this report, the Chinese development financing pattern in Pakistan is unlikely to change.

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"In the 10th JCC (Joint Cooperation Committee) meeting of CPEC (last week), Pakistan decided against renegotiating the terms of $15 billion energy projects, which were initially deemed expensive, because Pakistan needs China's finance," an official linked with CPEC projects in Pakistan told Nikkei on condition of anonymity.

The official added that Pakistan will continue to rely on Beijing for development financing, even if its terms are not concessional, because G-7 nations and other creditors are not very generous when it comes to financially supporting Pakistan.

Jeremy Garlick, associate professor of international relations at the University of Economics Prague, said Pakistan has been short of cash and looking for investments for decades. "The Chinese loans are rather expensive, but Pakistan has actively sought them. It is not as if the Chinese are imposing them upon Pakistan," he told Nikkei.
 
So easy to deal with. The pakis don't pay can oreadi. Wat the ChiCons going to do? Invade a right wing militant mudslimes country? They will face terrorists attacks forever
 
What’s the problem? Just waive the debt. China will never get back the 1+ trillion lent to the Yanks anyway, this is peanuts
 
The charts missed out turkey, is it intentional? Even Chinese banks in Singapore have large bad debts exposure in Turkish market.
Turkey will rank quite high on the charts posted by Froggy.
 
It's just a geopolitical loanshark and ransom operation. Debt traps.

Lend the target country plenty of money, create 'projects' to build infrastructure and high-speed rail etc. Bribe the officials to smoothen the process.

When the target country cannot repay those loans, China says never mind, give me your ports, your mines, your natural resources, and I will forgive your debts.

Had people forgotten what happened in the 1MDB scandal?

Malaysia (Najib) had plan to use Chinese money to bail out 1MDB, court hears​

https://www.reuters.com/article/us-malaysia-politics-najib-idUSKCN1VP1DS
 
It's just a geopolitical loanshark and ransom operation. Debt traps.

Lend the target country plenty of money, create 'projects' to build infrastructure and high-speed rail etc. Bribe the officials to smoothen the process.

When the target country cannot repay those loans, China says never mind, give me your ports, your mines, your natural resources, and I will forgive your debts.

Had people forgotten what happened in the 1MDB scandal?

Malaysia (Najib) had plan to use Chinese money to bail out 1MDB, court hears​

https://www.reuters.com/article/us-malaysia-politics-najib-idUSKCN1VP1DS
Thanks God Najib is out.
If Najib still continues, Singapore will be fuck. damn fuck.

I heard my Malaysian friends saying that Najib is pro business, but if Najib has his way. Malaysia will be in control by china.
We don't want China's tentacle spread around Malaysia and also of course Straits of Malacca.
 
What’s the problem? Just waive the debt. China will never get back the 1+ trillion lent to the Yanks anyway, this is peanuts
Fake news and keep bad mouthing China are their favourite pass time these days.
 
The whole point of BRI is to get all these underdeveloped cuntries in debt and make them give up their sea-ports in exchange. Eventually these sea-ports will be militarized for future CCPee's world domination.

In Chinese, it is called 韬光养晦, meaning building up your strength slowly and quietly over time without your enemy knowing, and then strike them hard with all your might at the right time.

All the US presidents before Trump were complicit in all this, Obama being the worst of the lot. Under his watch, he willfully let Winnie Xi built military islands on South China Sea. I'm surprised this black motherfucker was not even tried for treason.
 
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Pakistan exposure to china debt is a lot bigger than malaysia i think.
They got a 6 lane highway built by china from Karachi to Islamabad plus a huge port in the middle of nowhere.( khwadar?). The pkan was to build a oil and gas pipelinebftom khwadar to china but that will not be necessary if it's diverted through Afghanistan to iran/ Iraq/ Qatar.
 
Where are the SG figures? How much did Pinky borrow for HoJinx's gambling?
 
that’s because all african debts are written off. irrecoverable.
Then the CCP must be steering clear of India because it's a goldmine of profitable capital projects and can't compete against temasek holdings.

Sinkies must be very happy to know our CPF money will double or triple in India
 
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