![]() ![]() It promised to redraw the trade and finance map in China’s image. The first is the Belt and Road Initiative the second the Covid-19 pandemic.Īt its launch the BRI was a genuine shock to the system. Even in the long term, that is manageable.īut that was before the intervention of two completely different events, both, in their own way, born in China. Total lending to African governments, firms and state agencies accounts for 7% of its external debt, valued at $2.06 trillion at the end of 2019 by China’s State Administration of Foreign Exchange (Safe). ![]() It is possible China could have carried on in this vein for years. ![]() It warned: “The sheer volume of debt renegotiations points to legitimate concerns about the sustainability of China’s outbound lending.” Rhodium found deferrals ($3.3 billion for Ethiopia in 2018) and refinancings ($21.4 billion for Angola, a key Chinese ally, in 2015), and several smallish write-offs. There were old loans (a $34 million loan to Cameroon written off in 2001) and newer ones, notably an $800 million credit line, still under renegotiation, to tiny Djibouti, a valuable staging post on the Maritime Silk Road, part of the BRI. There were loans that funded budgetary items in Zimbabwe and state-run firms in Angola. The consultancy uncovered a “wide variety of loan types”, including funding for specific projects (such as a railway in Ethiopia) and more general items (an unspecified credit line to Ghana disbursed by CDB). It means at least a quarter of all Chinese lending to Africa has fallen into disrepair. “We suspect we are missing at least two dozen cases of debt forgiveness, especially to African countries,” wrote Rhodium.īy any measure it’s a startling number. In Africa, which dominates the data, it found 22 renegotiated loans worth $32 billion, although that number is probably higher, as much of China’s external lending is shrouded in secrecy. Rhodium analysts found 40 restructured BRI loans with a market value of $50 billion, extended recently to governments and state agencies by China Development Bank (CDB) and Export-Import Bank of China (Eximbank). It found evidence of China’s policy banks aggressively lending to fragile states, then rushing around in a desperate effort to plug holes in leaky budgets and extend, and often expand, credit lines. The image it depicts in its report is of a vast development initiative that wandered way off the rails and that is no longer fiscally sustainable. Still, what Rhodium expected to find was a snapshot of clear and coherent financial planning. Direct loans to Africa alone between 20 are estimated by the China Africa Research Initiative at Johns Hopkins University at $143 billion. RWR Advisory, a Washington-based consultancy, puts total lending to transport and energy projects from the Horn of Africa to central Asia since 2013, all under the BRI umbrella, at $461 billion. Politicians branded it as a chance to reset the global order, but its people dismissed it as “too generous” to recipient countries, says Scott Morris, a senior fellow at the Center for Global Development (CGD), a Washington-based non-profit. From the outset, the BRI was unpopular at home. Officials in Beijing pushed back against charges of ‘debt-trap diplomacy’, but they were beginning to stick.Ĭhina had internal reasons to fret. Western leaders feared that China was drowning the emerging world in general, and Africa in particular, in a new wave of debt. The second Belt and Road Forum had just wrapped up in Beijing and policymakers in the mainland and beyond were starting to voice their concerns. In April 2019, analysts at Rhodium Group in Hong Kong sat down to assess the financial viability of China’s Belt and Road Initiative (BRI). ![]()
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