Dalian [China], September 21 (ANI): China's flagship Belt and Road Initiative (BRI) has hit a snag, with many loans to emerging economies falling into repayment troubles, forcing Beijing to scale back on lending.
The COVID-19 pandemic, followed by the Russia-Ukraine conflict, has adversely affected emerging economies. As countries struggle to meet debt obligations, China is likely to face more problem loans, Nikkei Asia reported.
China reported 19 cases of interest payment waivers and other loan conditions in 2021, a significant jump from previous years, according to the US think tank Rhodium Group estimate.
These renegotiations covered a total of USD 52 billion for 2020 and 2021 as emerging economies were hit hard by the COVID-19 pandemic, the report said. The latest figure on renegotiations is more than triple the USD 16 billion for the preceding two-year period.
Nearly 60 per cent of China's foreign loans are now to countries in debt crises, compared to just 5 per cent in 2010, according to a report released by a group of researchers in April. This report included estimates from World Bank economist Sebastian Horn.
Chinese Foreign Minister Wang Yi told African countries in August that said Beijing will forgive the principal repayment on 23 interest-free loans that had been due by the end of 2021.
According to the Japanese daily, Beijing is treading lightly on its massive lending program.
China's new loans to lower-middle income nations came to just USD 13.9 billion in 2020, tumbling 58 per cent from the record high in 2018, the Nikkei report said citing data from the World Bank.
"With a slowing economy, China has shifted its economic focus to domestic demand," said Yusuke Suzuki at MitsuiCo. Global Strategic Studies Institute. According to Yusuke, it is unlikely that loans will increase significantly going forward.
In their June statement, even the Group of Seven (G7) leaders called out China on the issue of mounting loans to a number of countries. They urged Beijing to provide debt relief to low-income countries.
Kai Kajitani, a professor at Kobe University, noted that there is a risk that Chinese loans to Russia could go bad, due to Western sanctions.
"China could make up for this by suspending new loans to low-income economies or collecting debts," he was quoted as saying by Nikkei. (ANI)