China granted $48.5bn in bailing out to Pakistan

[JackTheRipper]

JOHANNESBURG (Reuters) – China spent $240 billion bailing out 22 developing countries between 2008 and 2021, with the amount soaring in recent years as more have struggled to repay loans spent building "Belt & Road" infrastructure, according to a study published Tuesday.

Almost 80% of the rescue lending was made between 2016 and 2021, mainly to middle-income countries including Pakistan, Argentina, and Mongolia, according to the report by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy.

China has lent hundreds of billions of dollars to build infrastructure in developing countries, but lending has tailed off since 2016 as many projects have failed to pay the expected financial dividends.

"Beijing is ultimately trying to rescue its own banks. That's why it has gotten into the risky business of international bailout lending," said Carmen Reinhart, a former World Bank chief economist and one of the study's authors.

Chinese loans to countries in debt distress soared from less than 5% of its overseas lending portfolio in 2010 to 60% in 2022, the study found.

Argentina received the most, with $111.8 billion, followed by Pakistan with $48.5 billion and Egypt with $15.6 billion. Nine countries received less than $1 billion.

The People's Bank of China (PBOC) swap lines accounted for $170 billion of the rescue financing, including in Suriname, Sri Lanka and Egypt. Bridge loans or balance of payments supported by Chinese state-owned banks was $70 billion. Rollovers of both kinds of loans were $140 billion.

China granted $48.5bn in bailing out to Pakistan

China granted $48.5bn in bailing out to Pakistan

dunyanews.tv

However, there are big differences between IMF programmes and Chinese bailouts. One is that Chinese money is not cheap. “A typical rescue loan from the IMF carries a 2 per cent interest rate,” said the study. “The average interest rate attached to a Chinese rescue loan is 5 per cent.”

China grants billions in bailouts as Belt and Road Initiative falters

New study attempts to capture total rescue loans from world’s biggest bilateral creditor

www.ft.com

 

[Khan_21]

Shouldnt have gone with CPEC. That anounted to the biggest import bill. On top of that it didnt provide anything substantial to the economy.

 

[etylo]

Shouldnt have gone with CPEC. That anounted to the biggest import bill. On top of that it didnt provide anything substantial to the economy.

Sure, Pakistan doesnt need development.

 

[epebble]

There is a silver lining in all this. There is a saying that if you owe a billion dollars to a bank, you own the bank. Using that formula, with $48.5 billion, China has great interest in Pakistan's economic stability. So, China will push, cajole and encourage Pakistan to maintain at least a modicum of economic viability.

 

[maithil]

So now we are are calling this rescue lending. Sounds so much better than debt trap.

 

[ThunderCat]

Shouldnt have gone with CPEC. That anounted to the biggest import bill. On top of that it didnt provide anything substantial to the economy.

I opposed it from the start mainly because of environmental reasons. Same thing for Gawadar. You cannot compensate unsustainable growth with money circulation.

But I notice anytime I opposes CPEC, I get accused of being a Pajeet in disguise. Maybe I'm exaggerating, but it happens.

 

[nahtanbob]

I opposed it from the start because of environmental reasons. Same thing for Gawadar. You cannot compensate unsustainable growth with money circulation.

But I notice anytime I opposes CPEC, I get accused of being a Pajeet in disguise. Maybe I'm exaggerating, but it happens.

Gwadar is a shithole for a reason. billions of dollars won't change anything

 

[epebble]

So now we are are calling this rescue lending. Sounds so much better than debt trap.

If you have the misfortune of having to borrow from a pawn shop, will you call him a rescue lender or debt trap? Even Antonio had to go to Shylock.

 

[nahtanbob]

Sure, Pakistan doesnt need development.

building roads, dams and power plants is not development

 

[ThunderCat]

Gwadar is a shithole for a reason. billions of dollars won't change anything

Even hypothetically if Gawadar was industrialized and overcrowded with commerce and amphibious pollution, I have no doubt it would remain a paradise in comparison to the real shithole that is Bangladesh and I genuinely state so. It's for that reason I never joined the Bangladesh hype.

I'm sure this is something you and I can agree on. I mean can you imagine Gwadar being anything near this. Even Karachi does not compare:

 

[Khan_21]

I opposed it from the start because of environmental reasons. Same thing for Gawadar. You cannot compensate unsustainable growth with money circulation.

But I notice anytime I opposes CPEC, I get accused of being a Pajeet in disguise. Maybe I'm exaggerating, but it happens.

The problem is people brainwashed here. Just because its China doesnt mean we have to be onboard with anything and everything.

Chinese have a way of debt traps with countries. Plus it didnt provide any skills to our labour or employment. Most were chinese who didnt want to be here.

The way they are developing gwadar is already nonsensical. The port is cut off from the city and population. It feels and looks like colonization for the local population who are already suffering.

Sure, Pakistan doesnt need development.

Development? For sure. Debt traps? No.

 

[Libexer]

However, there are big differences between IMF programmes and Chinese bailouts. One is that Chinese money is not cheap. “A typical rescue loan from the IMF carries a 2 per cent interest rate,” said the study. “The average interest rate attached to a Chinese rescue loan is 5 per cent.”

China grants billions in bailouts as Belt and Road Initiative falters

New study attempts to capture total rescue loans from world’s biggest bilateral creditor

www.ft.com

There is ANOTHER difference between IMF and chinese "help".

There is NO COLLATERAL mortgaged during IMF loan.

Last I checked most of your significant infrastructure from Airports to Expressways to Ports to gardens to power plants to Stock exchange now belong to china.

 

[ThunderCat]

Chinese have a way of debt traps with countries. Plus it didnt provide any skills to our labour or employment. Most were chinese who didnt want to be here.

I don't blame the Chinese. We choose to borrow their money, rather them forcing it on us. We screw up our country with all this growth while turning to them to "rescue" us with assurance that we'll make good use of it.

The Chinese are what they are today because they valued sustainability for what it was. By curbing and regulating their unsustainable population growth, they actually managed to develop.

Sure people can whine about the demographic imbalance, but it's a far better alternative to what would have been had they not controlled it.

In the meantime we foolishly try to foster our unsustainable growth with circulating money. In fact there are Pakistanis here advocating a larger population, thinking we can become like China. I am serious.

 

[etylo]

building roads, dams and power plants is not development

They are prerequisite for economic development and growth. Sure Pakistan can live without roads, dams and power plants and other modernities.

 

[ThunderCat]

building roads, dams and power plants is not development

I partially agree. I think it would really depend on the situation. But for the most part they have the opposite affect. Balance is the true development.