China’s New Silk Road infrastructure project has brought the more than 150 participating countries not only billions in investment projects but also a large mountain of debt. In the first decade of the initiative, Beijing granted loans worth almost a trillion euros for the construction of bridges, ports and highways, according to a report published on Monday by the US research institute AidData. More than half of the loans have already entered the repayment phase.
“The total outstanding debt – including principal but excluding interest – owed to China by borrowers in developing countries is at least $1.1 trillion,” the Virginia-based institute said in its report.
Loans totaling around $80 billion flow to low- and middle-income countries every year. In comparison, the USA only grants loans worth $60 billion annually to similarly financially weak countries. “Beijing finds itself in an unfamiliar and uncomfortable role – as the world’s largest official debt collector,” write AidData researchers.
Proponents of the New Silk Road repeatedly emphasize that the project will ensure economic growth in the Global South. However, critics complain about the opaque pricing of numerous infrastructure projects by Chinese companies. Countries such as Malaysia and Myanmar have already tried to renegotiate contracts to reduce costs. The project is also repeatedly criticized because of the enormous CO2 emissions and the damage to the environment.
The New Silk Road dates back to China’s President Xi Jinping and has led to the construction of ports, railways, airports and industrial parks in Asia, Europe, Africa and beyond. These projects are intended to give China better access to other countries’ markets.
