China development loans to emerging economies hit 13-year low in 2021 - study

Zynex

24/01/2023 24:00

By Jorgelina   do Rosario and Rachel Savage
       LONDON/JOHANNESBURG, Jan 24 (Reuters) - Loans committed
by China's two main trade policy banks fell to a 13-year low of
$3.7 billion in 2021 due to Beijing curtailing funding for
large-scale oil projects, a study from Boston University Global
Development Policy Center showed. 
    Commitments made to 100 developing nations by the
Export-Import Bank of China (China EximBank) and the China
Development Bank (CDB) have fallen every year since hitting a
record in 2016 as the lenders scaled back financing even before
the COVID-19 pandemic hit in 2020.
    "We expect an overall shift toward lower volume, higher
quality investment from China," Kevin Gallagher, director of the
university's Global Development Policy Center, told Reuters. 
    "China's domestic priorities beyond COVID-19 are still
significant, given the large amounts of debt and the swings in
renminbi that may necessitate the need to be conservative with
dollar holdings so they can serve as insurance on the home
front."
    China is the world's largest bilateral lender, according to
the World Bank data. Western countries such as the United States
and multilateral lenders are pressing Beijing to offer debt
relief to emerging economies in distress, such as Zambia and Sri
Lanka. China tends to disclose little on lending conditions and
how it renegotiates with borrowers.
    China EximBank and CBD made $498 billion in loan commitments
globally between 2008-2021 as part of Beijing's "Belt and Road"
infrastructure initiative.
    General purpose lending to state-owned oil companies, for
example in Angola, Brazil, Ecuador, Russia and Venezuela,
reached $60 billion between 2009 and 2017.
    Since then, lending has been less focused on petroleum
producers, with Bangladesh and Sri Lanka among top recipients.
The average size of loan pledges has also fallen, from $534
million between 2013-2017, to $378 million from 2018-2021.
    Russia was the top recipient, with $58 billion in loans in
the 2008-2021 period, followed by Venezuela with $55 billion
mostly for extraction and pipelines projects, but lending to the
South American oil giant halted in 2015, two years before it
defaulted on its overseas debt.
    Angola was the third largest recipient with $33 billion for
projects in transport, agriculture, water and oil, with Kenya,
Ethiopia and Egypt being other top African borrowers. 
    WORLD BANK STEPS IN
    While Chinese lending has been waning, World Bank lending
has ramped up, the study found. 
    The Washington-based lender financed projects in developing
countries worth an average of $40 billion annually between
2016-2019, before scaling up its response to the pandemic in
2020 when it stepped in with $67 billion, its largest annual
commitment since 2008. The following year, commitments were
almost $62 billion - 17 times more than Chinese financing. 
    "The World Bank had a fixed amount of lending capacity, but
this was accelerated as part of the COVID-19 response,"
Gallagher said, adding this might return to trend post-pandemic.
    Overall, China's commitments were 83% of the $601 billion
lent by the World Bank from 2008-2021.    
    Reuters reported this month that the World Bank was seeking
to vastly expand its lending capacity to address climate change
and other global crises and would negotiate with shareholders
ahead of April meetings on proposals including a capital
increase and new lending tools.
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World Bank tops China in loans for development projects    https://tmsnrt.rs/3QOBMYM
China's top borrowers     https://tmsnrt.rs/3iHCMkJ
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Rachel Savage and Jorgelina do Rosario, editing
by Karin Strohecker and Alex Richardson)
 ((Rachel.Savage@thomsonreuters.com;))