The News
China’s transformation from a lender to a debt collector threatens to reshape developing-world politics, a new report argued.
Though China-watchers have long argued that warnings of what Western officials call Beijing’s “debt-trap diplomacy” are overblown, the country nevertheless faces growing domestic pressure to recover outstanding loans, rather than restructure them.
As a result, debt-servicing costs on China’s 2010s-era infrastructure financing now “far outstrip new loan disbursements,” the Sydney-based Lowy Institute noted.
That has major implications for the countries themselves, which are already grappling with persistently high interest rates on foreign-currency borrowing and are struggling to fund domestic priorities, as well as the West, which is “squandering any geopolitical advantage” by retrenching on aid.
