China’s average annual spending on overseas development projects showed “dramatic expansion” to $ 85 billion in the five-year period from 2013, far exceeding spending by the United States , from Japan and other great powers, a study by the American research laboratory AidData showed on Tuesday. .

The year 2013 is when Chinese President Xi Jinping advocated the Belt and Road Initiative to increase Beijing’s influence abroad by financing and building infrastructure projects in Asia, Europe. and in Africa.

The report, which described Beijing’s grant and lending activities as “shrouded in secrecy,” also found that Chinese development projects have been financed by debt rather than aid, and that most Chinese loans abroad are granted on less generous terms than traditional bilateral agreements. and multilateral creditors.

AidData has studied more than 13,400 projects worth $ 843 billion in 165 countries over the past 20 years.

The report was released at a time when the Group of Seven major industrialized nations, which includes the United States and Japan, are seeking to counter China’s BRI by launching their own version of infrastructure projects for the developing world. . The initiative has been criticized for its lack of transparency, poor environmental and labor standards, and developing country debt.

“For some time now, China and the United States have been known to be rivals when it comes to overseas spending. What we did not know is that since the introduction of the Belt and Road Initiative, China is no longer really a rival of the United States, it is now overtaking the United States. , as well as other great powers, on a two-to-one basis. or more, ”said Bradley Parks, executive director of AidData.

Between 2000 and 2012, Beijing’s average annual development finance commitments were $ 32 billion and Washington’s were roughly equivalent to nearly $ 34 billion.

But in the five years from 2013, China’s spending on the overseas development finance program averaged $ 85.4 billion a year, while U.S. spending was $ 37. billion dollars and those of Japan of 25 billion dollars, according to the report.

China also provided only 12% of its international development finance through official development assistance between 2000 and 2017, while the United States provided 73% through ODA – highly concessional grants and loans. – during the same period.

While a typical loan from China has an interest rate of 4.2% and a repayment period of less than 10 years, loans from countries like Germany, France, and Japan carry a rate of interest of just over 1% and a 28-year payback period, Parks mentioned.

The report also warns of a sharp increase in the “hidden debt” that low- and middle-income countries owe to China, referring to debt that does not appear on government balance sheets but could become government bonds. government reimbursement in the future.

Such debt is piling up because China’s overseas loans, which in pre-BIS times were largely loans to government agencies, are now largely channeled to state-owned enterprises, state-owned banks, private sector institutions and other entities.

“The tricky thing about this is that all of these debts – even though most of them don’t show up on the balance sheets of developing country governments – most of them have some sort of liability protection. part of the host government, ”Parks said. .

“If the private company goes bankrupt … then it very quickly becomes a public debt,” he added.

Hidden debts are “problematic even in normal times, but they are of particular concern” during the coronavirus pandemic as the repayment capacities of the poorest countries are “considerably weakened and Chinese debtors find it increasingly difficult to secure themselves. engage in collective restructuring negotiations, ”according to the report. .

He also revealed that 35% of Chinese infrastructure projects have encountered “major implementation problems,” such as corruption scandals, labor law violations, environmental risks and public protests.

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