Thread Reader Atif Mian@AtifRMian: The chickens have come home to roost. China’s lending to some of the most fragile countries was poorly structured and often not in the best interest of recipient countries.

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Atif Mian@AtifRMian

The chickens have come home to roost.

China’s lending to some of the most fragile countries was poorly structured and often not in the best interest of recipient countries.

I will spell out the issues

1/

ft.com/content/5a3192… The timing of BRI was driven by Chinese self-interest: a country with massive surplus savings, needed new places to invest post-2008 as US could no longer receive as much as before.

So China turned to weak countries that it had influence over.

2/ The weak country leaders saw this as an opportunity to quickly show case some “flashy projects”.

There was no due process. For example, Chinese State-owned enterprises (SOEs) were both lenders and contractors – a situation rife for over-invoicing to boost Chinese returns.

3/ Investments were often in areas that largely serviced domestic consumption or non-tradable sectors.

With little productivity gain for export sector, payback was going to be extremely hard

Plus loans were denominated in dollars – world’s hardest currency in times of trouble.
4/ There was little to no due diligence on the side of borrowing countries.


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For the rest:

https://threadreaderapp.com/thread/1256469396140306434.html

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