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In the News

Economic Development - China spent $240bn on belt and road bailouts from 2008 to 2021

Graham Watson

28th March 2023

This article looks at the role of China in financing infrastructure projects in the developing world, as part of its Belt and Road programme. What is interesting is the fact that this isn't about new projects but the fact that China has had to bailout recipient nations to the tune of $240bn, and the opportunity cost of this seems to have been a commensurate reduction in lending for new projects.

Please read: China spent $240 bn on belt and road bailouts from 2008 to 2021, study finds (The Guardian)

What's also worth noting is the fact that China's bailouts come at a cost: "the average interest rate attached to a Chinese rescue loan was 5%, compared with 2% for a typical rescue loan from the IMF" and this will mean higher debt repayments going forward.

The Belt and Road Initiative (BRI), also known as the One Belt One Road (OBOR) initiative, is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organizations. It is considered a centerpiece of the Chinese leader Xi Jinping's foreign policy. The BRI forms a central component of Xi's "Major Country Diplomacy" (Chinese: 大国外交) strategy, which calls for China to assume a greater leadership role for global affairs in accordance with its rising power and status.

The BRI is a multi-trillion dollar project that aims to connect Asia, Africa, Europe, and Oceania through a network of roads, railways, ports, pipelines, and other infrastructure projects. China has already invested billions of dollars in BRI projects, and the initiative is expected to continue to grow in the coming years.

The BRI has been met with mixed reactions. Some countries have welcomed the initiative, seeing it as an opportunity to boost economic growth and development. Others have raised concerns about China's growing economic and political influence, and the potential for Chinese debt traps.

The BRI is a complex and ambitious project, and its long-term impact remains to be seen. However, it is clear that the BRI is a major force in shaping the global economy and politics.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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