Dear MEL Topic Readers,
Developing countries owe China at least $1.1 trillion – and the debts
are due
China is one of the world's largest providers of financial loans and
aid to developing countries. As of 2022, the world’s second-largest economy has
provided a total of $1.3 trillion in loans and aid to developing countries mainly
on infrastructure projects, such as roads, railways, power plants, and
telecommunications networks. These projects were expected to help boost
economic growth and development in the recipient countries. One example is the
China-Pakistan Economic Corridor, a $62 billion development project that links
the Chinese port city of Gwadar with Pakistan's northern provinces including
the construction of roads, railways, power plants, and other infrastructure. Another
is the Addis Ababa–Djibouti Railway, a 756-kilometer railway line that connects
Ethiopia and Djibouti. China provided $4 billion in financing for the project,
which was completed in 2016. Most of these loans had a five to seven years of
grace period plus a two-year suspension due to the pandemic. Now, there are at least
57 countries that have outstanding debt to Chinese creditors. Have those heavy infrastructural
investments brought out any economic returns to the recipients? Will those
borrowers be able to repay the debts, or will those Chinese lenders bear the painful
rescheduling or write-off of the loans?
Read the article and learn about the mounting debts in developing
countries.
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