Chinese Global Infrastructure Plan Found Hiding Massive Debt
September 30, 2021
China’s massive Belt and Road Initiative is plagued by hidden debt and problematic projects, according to a new research study. The initiative is China’s attempt to overhaul infrastructure across the entire globe particularly in the developing world.
An analysis of the Belt and Road projects throughout the world by researchers at the College of William and Mary found that 42 low- and middle-income countries now have debt with China that exceeds 10% of their GDP.
They also identified $385 billion in Chinese loans that are not included in nations’ official records of borrowing. The researchers note that this debt is easily hidden because it is lent through special-purpose corporations rather than through official government channels. This hidden debt amounts to nearly half of China’s overseas lending.
The report also found that 35% of the initiative’s overseas building operations have faced corruption scandals, environmental and labor complaints, and public pushback from locals.
The report said that its findings confirm that China is pursuing three main objectives with the initiative: securing food and energy commodities to account for domestic shortfall, keeping its huge domestic construction industry productive by pursuing foreign projects, and turning the money earned by the nation’s exporters into foreign loans.
The research adds to a growing number of voices in the U.S. and other developed nations who are criticizing the initiative as exploitative and seeking only to help the developing world for its own gain.