Almost all of the money went to countries linked to China’s Belt and Road (BRI) global infrastructure and trade project, such as Sri Lanka and Pakistan. These are mostly low- and middle-income nations that have received Chinese loans for infrastructure development, according to the study.
Behind the 40-page report is the World Bank and the American Harvard Kennedy School. The study shows that the conditional support loans accelerated between 2016 and 2021.
Warns of loan traps
Around the world, countries linked to the BRI have been squeezed as rising inflation and interest rates, along with the continued impact of the corona pandemic, hurt their ability to repay loans.
According to Beijing, the goal of the BRI is to deepen friendly trade relations with other countries, especially developing countries.
Critics have long accused China of luring low-income countries into debt traps by offering massive loans that are too expensive.
Higher average interest rate
The report warns that Chinese loans tend to be less transparent compared to other international lenders, often carrying an average interest rate of five percent, compared to the typical two percent interest rate on an International Monetary Fund (IMF) loan.
China’s foreign ministry has accused “certain people” of talking about Chinese loan traps and defaming China, saying it is “something we absolutely do not accept”.
A spokesperson also stressed that China has never forced anyone to borrow money and will not have any political conditions on loans.