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
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.
For the rest: