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  1. #1
    Thailand Expat harrybarracuda's Avatar
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    The truth about "Belt and Owed"

    It's worse in Laos than I thought. The level of subterfuge the chinkies use to hide their dirty dealings is astonishing.

    This is how the chinky parasites work.

    China hands out at least twice as much development money as the US and other major powers, new evidence shows, with most of it coming in the form of risky high-interest loans from Chinese state banks.


    The sheer amount of Chinese lending is startling. Not too long ago China received foreign aid, but now the tables have turned.


    Over an 18-year period, China has granted or loaned money to 13,427 infrastructure projects worth $843bn across 165 countries, according to the AidData research lab at William & Mary, a university in the US state of Virginia.


    Much of this money is linked to Chinese President Xi Jinping's ambitious Belt and Road strategy. Starting in 2013, it leverages China's expertise in infrastructure projects, and ample foreign currency, to build new global trading routes.


    However, critics fear that the high-interest loans funding many Chinese projects are saddling unsuspecting populations in sky-high debt.


    And that's news even to Chinese officials themselves. The AidData researchers - who have spent four years tracing all of China's global lending and spending - say that Chinese government ministries are regularly going to them for information on how Chinese money is being used overseas.


    "We hear from public officials in China all the time, saying 'Look, you're in the only game in town'," explains Brad Parks, executive director of AidData. "They say: 'We can't get our hands on this data internally'."


    A twisting railway running between China and the neighbouring country of Laos is often touted as a prime example of China's off-the-books lending.


    For decades, politicians wondered about building such a connection - linking landlocked south-west China directly to South East Asia.


    However, engineers warned the cost would be prohibitive: tracks would need to run through steep mountains, requiring dozens of bridges and tunnels. Laos is one of the poorest countries in the region and couldn't afford even a fraction of the cost.


    Enter China's ambitious bankers: with backing from a group of Chinese state companies and a consortium of Chinese state lenders, the $5.9bn railway is set to begin operations in December.


    However, Laos had to take out a $480m loan with a Chinese bank to fund its small part of the equity. One of Laos' few sources of profit, the proceeds of its potash mines, were used to back the massive loan.


    "The loan that China's Eximbank made to cover part of the equity really showcases the urgency of the Chinese state to push through the project," explains Wanjing Kelly Chen, research assistant professor at the Hong Kong University of Science and Technology.


    Most of the line is owned by the Chinese-dominated railway group, but under the murky terms of the deal, the Laotian government is ultimately responsible for the railway's debt. The imbalanced deal has led international creditors to downgrade Laos' credit rating to "junk" status.


    In September 2020, on the brink of bankruptcy, Laos sold a major asset to China, handing over part of its energy grid for $600m in order to seek debt relief from Chinese creditors. And this is all before the railway has even begun operations.


    The Laos railway is far from the only risky project that Chinese state banks have funded - and yet, AidData says China remains the financier of first resort for many low and middle income countries.
    China: Big spender or loan shark? - BBC News

  2. #2
    Thailand Expat tomcat's Avatar
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    China has made $385 billion worth of hidden loans abroad, report says

    Last Updated: Sept. 29, 2021 at 9:12 a.m. ETFirst Published: Sept. 29, 2021 at 3:08 a.m. ET By Steve Goldstein (MarketWatch)


    In this photograph taken on February 24, 2020 a Chinese laborer works at a construction site on reclaimed land, part of a Chinese-funded project for Port City, in Colombo. ISHARA S. KODIKARA/AGENCE FRANCE-PRESSE/GETTY IMAGES


    • China has authored $385 billion worth of so-called hidden loans, charging more than western development agencies so that poorer countries do not have to disclose their existence, a report released Wednesday showed.


    The AidData project of William & Mary’s Global Research Institute found that 42 countries now have levels of public debt exposure to China in excess of 10% of GDP, often hidden from the World Bank’s debtor reporting system because the recipients of the loans are not central governments.

    The average government is underreporting its actual and potential repayment obligations to China by an amount that is equivalent to 5.8% of its GDP, according to AidData.

    Instead, China is making loans to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries. Most of them benefit from explicit or implicit forms of host government liability protection, the report said.

    A typical loan from China has a 4.2% interest rate and a repayment period of less than 10 years, compared to the typical 1.1% interest rate and 28-year repayment period from a lender like Germany, France or Japan, the report said.

    The report, focusing on China’s Belt and Road Initiative, covers projects approved between 2000 and 2017 and implemented between 2000 and 2021.
    Majestically enthroned amid the vulgar herd

  3. #3
    Thailand Expat harrybarracuda's Avatar
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    A typical loan from China has a 4.2% interest rate and a repayment period of less than 10 years, compared to the typical 1.1% interest rate and 28-year repayment period from a lender like Germany, France or Japan, the report said.
    So Loan shark then.

  4. #4
    Thailand Expat misskit's Avatar
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    ^^ Expanding on that item..

    Countries Have $385B in Hidden Debts to China, Study Finds

    A new study found under-reported debts of at least $385 billion owed by different countries to China in the past two decades, and that one-third of projects under the Belt and Road Initiative have run into major implementation problems.


    The hidden debts, which slipped through the scrutiny of international lenders such as the World Bank and the International Monetary Fund (IMF), and credit rating agencies, mean borrowing countries may have to repay more than they think.


    The findings are from a four-year study by AidData, an international development research lab based at William & Mary’s Global Research Institute in the United States.


    “Chinese debt burdens are substantially larger than research institutions, credit rating agencies, or intergovernmental organizations with surveillance responsibilities previously understood,” the study said.


    The reason is an increasing number of deals struck not directly between governments through central banks but through often opaque arrangements with a range of financing institutions, hence “the debt burdens were kept off the public balance sheets.”


    The study said that nearly 70 percent of China’s overseas lending “is now directed to state-owned companies, state-owned banks, special purpose vehicles, joint ventures, and private sector institutions in recipient countries” rather than sovereign borrowers which are central government institutions.


    According to Brad Parks, AidData’s executive director and a co-author of the report, “the hidden debt problem is getting worse over time.”


    Most of the hidden debts occurred in projects under the Belt and Road Initiative (BRI), China’s ambitious international development program and President Xi Jinping’s brainchild. It was launched in 2013 under the original name One Belt, One Road.


    The study also found that 35 percent of the BRI infrastructure project portfolio has encountered major implementation problems – such as corruption scandals, labor violations, environmental hazards and public protests.


    ‘Loanshark practices’


    AidData studied 13,427 China-funded projects across 165 countries valued at $843 billion over an 18-year period and found that the average government “is under-reporting its actual and potential repayment obligations to China by an amount that is equivalent to 5.8 percent of its GDP.”


    Collectively, these under-reported debts are valued at about $385 billion.


    Forty-two developing countries, including Laos, Papua New Guinea, the Maldives, Brunei, Cambodia and Myanmar, now have levels of public debt exposure to China in excess of 10 percent of GDP, the study said.


    The authors of the study said that Beijing has used debt rather than aid “to establish a dominant position in the international development finance market. Since the BRI was introduced in 2013, China has maintained a 31-to-1 ratio of loans to grants.”


    Beijing’s lending to low- and middle-income countries is provided on less generous terms than loans from other lenders and multinational creditors.


    “A typical loan from China has a 4.2 percent interest rate and a repayment period of less than 10 years,” compared to a typical loan with a 1.1 percent interest rate and a repayment period of 28 years from countries such as Germany, France or Japan.


    “This is quite comparable to loanshark practices at the global level,” said Soumya Bhowmick, associate fellow at the Observer Research Foundation in Kolkata, India, who was not involved in the study.


    “This is particularly worrisome because countries which are grappling with the double whammy of high public external debt, as well as high volumes of debt owed to China, highlight the precarious situation of their own public finances,” he said.


    However, as developing countries are desperate to find money to finance their infrastructure projects, they seem to have no choice but reach out to Chinese lenders whose favorite risk mitigation tool is collaterization, or the use of the borrowing country’s valuable assets or natural resources.


    Laos, for example, had to sell part of its national electricity grid to China in 2020 in exchange to debt relief from Chinese creditors.


    Laos’ overall level of debt exposure to China is equivalent to 64.8 percent of its GDP, including 35.4 percent of GDP worth of hidden debt that comes with the China-Laos railway mega project, according to the study. The $6 billion railway is to open in December.

    ‘Implementation problems’


    The Philippines, too, had to place national assets as collateral in a 2018 loan agreement with China to finance a large irrigation project dubbed the Chico River project.


    “Beijing is more willing to bankroll projects in risky countries than other official creditors, but it is also more aggressive than its peers at positioning itself at the front of the repayment line (via collateralization),” AidData said.


    Forty of the 50 largest loans by China were collateralized and China has rapidly scaled up the provision of loans to resource-rich countries that suffer from high levels of corruption.


    Corruption scandals, labor violations, environmental hazards, and public protests have blighted BRI projects, the study found.


    A part of a project to build the East Coast Rail Link connecting Kuala Lumpur and Kota Bharu in Malaysia, funded by China Eximbank, was cancelled in 2018 after allegations of artificial cost inflation and corruption. The project resumed a year later after renegotiations led to a deal slashing construction costs by almost a third.


    BRI infrastructure projects are also taking substantially longer to implement. A project to build Vietnam’s first elevated railway line in Hanoi suffered from years of delay and a budget ballooning by 60 percent.


    “Host country policymakers are mothballing high-profile BRI projects because of corruption and overpricing concerns, as well as major changes in public sentiment that make it difficult to maintain close relations with China,” said Brooke Russell, an associate director at AidData and one of the other co-authors of the report.


    China’s foreign ministry said in a statement cited by Reuters that since its launch, the BRI had “consistently upheld principles of shared consultation, shared contributions and shared benefits.”


    Currently, China is outspending the U.S. and other major powers by more than 2-to-1 on overseas development. In an average year during the BRI era, China spent $85 billion on their overseas development program as compared to the U.S.’s $37 billion.


    Authors of the study, however, warned that China would soon face higher levels of competition in the global infrastructure finance market.


    At a meeting of the G7 industrialized nations in June, the U.S. and its allies announced a spending plan to rival China's influence called Build Back Better World (B3W) which promises to fund global infrastructure projects that are financially and environmentally sustainable.


    The E.U. recently also announced its Global Gateway Initiative which analysts say is likely to collide head-on with the BRI.


    “It remains to be seen if ‘buyer’s remorse’ among BRI participant countries will undermine the long-run sustainability of China’s global infrastructure initiative, but clearly Beijing needs to address the concerns of host countries in order to sustain support for the BRI,” AidData’s Russell said.

    Countries Have $385B in Hidden Debts to China, Study Finds — BenarNews

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