The bailouts represent a linchpin of the massive infrastructure loans China has extended for nearly a decade as part of its $838 billion Belt and Road Initiative, a program that has seen it eclipse the World Bank as the biggest public works funder in the world. Three of the biggest recipients of China’s bailout loans were Pakistan, Sri Lanka and Argentina, which together have received as much as $32.83 billion since 2017, according to data compiled by AidData, a research lab. at William & Mary, a university in the US. . Other countries that received bailout loans from Chinese state institutions included Kenya, Venezuela, Ecuador, Angola, Laos, Suriname, Belarus, Egypt, Mongolia and Ukraine, according to AidData, which did not provide details for these countries. This credit is intended to enable countries to continue foreign debt payments and continue to buy imports, preventing a balance of payments (BoP) distress that can develop into huge storms like the 1997 Asian crisis and the Latin American crisis. 1980s. The IMF’s strict prescriptions in the wake of the Asian crisis were deeply unpopular, fueling a backlash against it that persists to this day. Unfinished rail tracks for the Standard Gauge Railway lie on the ground near Duka Moja, Kenya © Luis Tato/Bloomberg Unlike the IMF, which announces the details of credit limits, debt relief and restructuring programs to debtor countries, China operates largely in secret. China’s financial institutions publish few details of the credit it issues, and Beijing does not base its lending on debt restructuring or economic reforms in recipient countries, analysts said. In most cases, the goal of China’s emergency lending is to prevent default on infrastructure loans made under the Belt and Road Initiative, analysts said. “Beijing has tried to keep these countries dangerous by providing emergency loan after emergency loan without asking its borrowers to restore economic political discipline or continue debt relief through a coordinated restructuring process with all major creditors,” said Bradley Parks, executive director of AidData. . AidData Research Lab maintains the world’s most comprehensive database of China’s global financial activities primarily by collecting data from countries receiving Chinese loans. The dataset records thousands of loans from more than 300 Chinese state-owned institutions and state-owned entities in 165 low- and middle-income countries. Parks added that China’s approach often “postpones the day of reckoning.” “When Beijing acts as an alternative lender of last resort and bails out an ailing sovereign without demanding economic policy discipline or seeking coordinated debt restructuring with major creditors, it is effectively kicking the can down the road and leaving it to others to solve the problem. underlying solvency problem,” Parks said. A study of individual loans provided by Chinese financial institutions since 2017 to Pakistan, a key participant in the Belt and Road Initiative, shows trickle-down support in the form of loans from state-owned banks and SAFE, the agency that controls its $3 trillion Foreign Exchange Reserve Beijing. The terms of such loans are far from favorable, as they are often structured at a margin of around 3 percent above the reference financing cost. In addition to these loans, the People’s Bank of China, the central bank, has a currency swap arrangement with its Pakistan bond that allows Islamabad to raise funds when it needs them, AidData records show. The PBoC declined to comment. Commentators said China’s bailout lending risked prolonging and exacerbating the debt distress and crises that often follow in debtor countries. “I see these as a major obstacle to resolving the crisis,” said Gabriel Sterne, head of EM macro at Oxford Economics and a former senior economist at the IMF. As Sri Lanka’s current economic collapse shows, Beijing’s support is sometimes insufficient, analysts said. “The suspicion is that countries are looking for the loan to avoid going to the IMF, which requires painful reforms,” ​​Sterne added. “There may be circumstances in which betting on redemption works, but generally – as in the case of Sri Lanka – it just makes the adjustment more painful when it actually happens.”

Sean Cairncross, former chief executive of the Millennium Challenge Corporation, a US government foreign aid agency that provides grants conditional on democratic governance and financial transparency, said China’s loans were made to pursue long-term goals in competition with rival powers. “It is not about a specific loan or country. . . They want to have the ear of the governments where the raw materials are, or big markets, or strategic ports, or where there is access to shipping lanes,” he said. “It’s a way to limit the strategic options for the US and the West in terms of access and influence globally.”