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China’s Expenditure on Global Development
Chinese financial institutions have lent $1.34 trillion to developing countries from 2000 to 2021, with lending shifting from infrastructure to rescue financing. This has drawn criticism from the West and recipient countries due to debt concerns.
Since 2000, China has spent over $1.34 trillion on 20,985 projects across 165 countries, with a significant increase in spending after launching the Belt and Road Initiative in 2013.
Key Takeaways
- China has spent over $1 trillion on more than 20,985 development projects across 165 countries since 2000, establishing itself as a major global financier.
- The Belt and Road Initiative has driven a significant increase in China’s international development spending, surpassing the United States and other major powers in the early years.
- Russia, Venezuela, and Pakistan have been major recipients of Chinese development funding, but Beijing’s focus is shifting to protect its global investments.
- The Group of Seven (G7) countries have increased their development spending to compete with China, but it remains uncertain if they can match Beijing’s financial prowess in the long term due to China’s vast foreign exchange reserves.
The AidData research lab at William & Mary provided these figures, which highlight China’s growing influence as a global financier. China’s spending has outstripped that of the United States and other major powers at times, prompting increased development spending by the G7 countries in 2021.
However, it remains uncertain if the US and its allies can match China’s financial capacity in the long term due to China’s substantial foreign exchange reserves. The data is based on inflation-adjusted 2021 values and is categorized by sector and region.
Despite being the top three recipients, these countries may be losing appeal for Beijing due to economic and strategic factors. Russia received the most funding and is important for China strategically. Venezuela, with the world’s largest proven oil reserves, received significant investment, but economic mismanagement has led to a reduction in Chinese funding.
Pakistan, with deep ties to China, received substantial funding, especially for the China-Pakistan Economic Corridor. However, economic struggles and debt have led to a decrease in Chinese development funding. The study suggests that China is reducing its commitments in countries facing political instability or debt crises to safeguard its global investments.
Chinese financial institutions have lent $1.34 trillion to developing countries from 2000 to 2021, with lending shifting from infrastructure to rescue financing. This has drawn criticism from the West and recipient countries due to debt concerns. The sources and focus of China’s overseas financing have changed, with the People’s Bank of China and the State Administration of Foreign Exchange becoming major lenders.
China’s growing rescue lending is denominated in renminbi and repayment risk is managed through foreign currency cash escrow accounts. China is also collaborating more with multilateral lenders and Western banks. The destinations of Chinese overseas lending have shifted, with decreased lending to African countries and increased lending to European countries.
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Source: VOA News
