China competed with the United States in the struggle for the right to lend to debtor countries. The PRC has become the world’s largest creditor to developing countries, and this could threaten prolonged financial difficulties for the latter. informs Bloomberg cites the results of a study by World Bank economists, the results of the AidData research project at the College of William and Mary, Harvard University in Germany, and the Institute for World Economics in Kiel.
As a source of finance to provide loans to developing countries, the Chinese authorities are using the substantial reserves of the local Central Bank. The article states that the monetary regulator’s monetary reserves for these purposes are estimated at $3.3 trillion.
“The world has embarked on a new global system of cross-border lending to debt-strapped countries, competing with US-led structures operating since the 1940s. Over the past two decades, the People’s Bank of China has signed swap agreements worth approximately $580 billion with 40 countries and trade blocs.
From 2016 to 2021, at least two of China’s debtor countries had difficulty paying Beijing. At the same time, financial problems were exacerbated by the consequences of the coronavirus pandemic. For comparison, ends the note that during the same period the International Monetary Fund (IMF) allocated only $144 billion to aid developing countries.
to the U.S. Senate on March 22. made Bill prohibiting the World Bank from lending to China. This initiative is explained by the fact that US authorities have an obligation to ensure that their money and resources do not go to the PRC, but to the countries that need them most.
Source: Gazeta
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