China the world's biggest debt collector, report shows
November 7, 2023
China lent $1.34 trillion to developing countries in the period between 2000 and 2021, largely for work tied to its Belt and Road project.
Chinese President Xi Jinping speaks at the opening ceremony of the Belt and Road Forum to mark the 10th anniversary of the Belt and Road InitiativeImage: Edgar Su /REUTERS
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China is owed over $1 trillion (€935 billion) through its Belt and Road Initiative (BRI), making it the world's biggest debt collector, a report has said.
The report, published on Monday by researchers at AidData, showed the world's biggest bilateral lender switching from infrastructure to rescue lending, with an estimated 80% of the loans supporting countries in financial distress.
"Beijing is navigating an unfamiliar and uncomfortable role — as the world's largest official debt collector," AidData said in its report.
"Total outstanding debt — including principal but excluding interest — from borrowers in the developing world to China is at least $1.1 trillion," said the research institute that tracks development finance at Virginia's College of William and Mary.
According to China, more than 150 countries have signed up to the BRI, a mammoth global infrastructure thrust launched by President Xi Jinping in 2013.
Based on data collected on Chinese financing of almost 21,000 projects in some 165 countries, AidData said Beijing had now committed aid and credit "hovering around $80 billion a year" to low and middle-income nations.
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Overseas finance has won the Asian giant allies from across the developing world.
At the same time, there has been criticism from the West and in some recipient nations, like Sri Lanka and Zambia, that infrastructure projects China-funded burdened them with debt they were unable to repay.
Last month, at a summit that marked a decade since the initiative was first unveiled, Xi said that China would put more than $100 billion of new funds into the BRI.
However, a joint report by the World Bank and other institutions, including AidData, released this year said China had been forced to give out billions of dollars in bailout loans to BRI countries in recent years.
Boten: How China's investment transformed this Laotian town
Once a dilapidated town in northern Laos, Boten has transformed beyond recognition because of a 422-kilometer highspeed railway line that is part of Beijing's Belt and Road Initiative.
Image: Oliver Raw/DW
Influx of Chinese workers
As of today, an overwhelming 80% of residents in Laos' Boten town are Chinese nationals. Many of them are construction workers, but they also work in shops and restaurants. This was not always the case.
Image: Oliver Raw/DW
A gambling hub
In 2002, a big casino was constructed in Boten, which started attracting many Chinese tourists. In 2011, the Laotian government shut down the casino on Beijing's request. The casino closure had a negative impact on Boten's economy.
Image: Oliver Raw/DW
A change of fortune
But Boten's fortunes suddenly changed when Beijing announced the Laos-China highspeed railway project as part of its Belt and Road Initiative in October 2010. The construction began in 2016 and was completed five years later. The 1,035-kilometer cross-border railway, which includes 422 kilometers in Laos, connects China's southwestern Kunming city to the Lao capital Vientiane.
Image: Oliver Raw/DW
Rapid development
Since Chinese investment started pouring in, high-rise buildings, which are rare even in the capital Vientiane — have sprung up in the border town.
Image: Oliver Raw/DW
Chinese dominance
In Boten, it is now common to pay in Chinese yuan rather than the local currency, kip. Mandarin is the main language of communication between the town's Chinese and Laotian residents.
Image: Oliver Raw/DW
By Chinese, for Chinese
With Chinese investment coming in, the town started to prosper. The town's Laotian character, however, was compromised. Most businesses in Boten are now Chinese-run or owned. Restaurants featuring hotpot with red broth are more common here than eateries serving Lao staples like larb and sticky rice.
Image: Oliver Raw/DW
Changed beyond recognition
"This is Laos, but it doesn't feel like Laos. Maybe in the future it will become a part of China," said one Laotian worker. Shops in Boten are stocked with Chinese products – from national liquor Maotai to soft drinks with Chinese labels.
