Why China’s belt and road loans may not be the debt trap other countries fear
- Study by US-based Rhodium Group finds only one confirmed case of asset seizure and says Beijing is more likely to renegotiate burdensome debts
China is inclined to renegotiate or write off debts incurred by other countries for its belt and road infrastructure projects and only rarely seizes assets, a study by a New York consultancy has found.
The Rhodium Group’s research looked at 40 cases of external debt renegotiation between 2007 and this year and found there was only one confirmed case of asset seizure – in Sri Lanka.
The conclusions, based on the studies of Chinese debt renegotiations with 24 countries in Asia, Africa and Latin America, challenge claims that the Belt and Road Initiative will leave countries with debts they cannot repay and force them to hand over assets or natural resources to Beijing.
The report concluded that Beijing had renegotiated about US$50 billion of loans and in most cases, debts had either been written off or payment was deferred.
One example it gave was Cuba, which had US$2.8 billion in debts written off in 2010, while last week Ethiopia announced that Beijing had forgiven interest owed on belt and road loans.
