More countries are struggling to pay back Chinese debt - DW News

[TexasTowelie]

China has financed major infrastructure projects around the world for more than a decade as part of its Belt and Road Initiative. But the costs are growing: A new study shows many of the loans have gone badly, putting borrowers and Chinese banks in danger.

[Tetrachloride]

1. Sri Lanka is one. The main question is which banks.

might be China Foreign Ministry

[modrepub]

2. Big Mega Projects

or small micro loans, that is the choice. China and a lot of western countries seem to focus on funding very large mega infrastructure projects hoping for leaps of advancement (and enough economic stimulation so that the loan can be repaid). More often then not, especially in less developed countries, the project never produces the anticipated affect and the loan goes into default.

You wonder if instead of funding top down mega projects if smaller loans focused on helping individuals would produce a more desired impact. Even if a fair amount of the loans were not to pan out, there would be some that would be effective at what they were intended and allow the loan to be repaid. Guess the big infrastructure type projects like building railroad lines, dams, power plants and the like are more appealing than say funding someone who wants to buy a car to run a taxi business or something on that level.

[TexasTowelie]

4. I don't believe that China wants to become a full service bank to the general populace.

There is far too much work to investigate, set up the administration, and use collection efforts when loans fail when it involves individuals versus entities such as governments or large corporations. The assets for the loan are also fixed compared to vehicles for individuals which are mobile. I doubt that while China wants to become the world's repossession entity either.

[2naSalit]

5. Some thoughts...

Last edited Sun Apr 2, 2023, 11:36 AM - Edit history (1)

I see some incentives for China where they have control of resources in the country they help and cheap labor. Also, keeping the country in debt makes them vulnerable and susceptible to control mechanisms. Helping the populace isn't in their interest beyond making those who cooperate more comfortable than those who don't.

It's an age old method that has worked for larger countries with money and influence.

[modrepub]

6. Not Bad Points

But to gain any control over any seized assets, one would have to work within the system to enforce the collection. If that doesn't work then you'll have to send over some military or support some sort of rebellious sect to put themselves in control to get what you want.

I would think what happened to the US in Afghanistan and Iraq would provide an indication on the limitation of a strategy to cause a country to be indebted to you for the sake of getting control. "Control" is much more complicated than having someone indebted to you. Symbiotic relationships are much easier to maintain than parasitic relationships.

[2naSalit]

7. Good points as well...

I would have to spend more time looking into the issue to have a more informed answer. Been focused on other stuff.

[dalton99a]

3. Perhaps China will seize their territories for Lebensraum