China’s Belt and Road Initiative (BRI), declared the project of the century, is now coming to life. Many of China’s investments in Africa under the Belt and Road Initiative have reportedly failed, and while the authorities seem to have let go of the problem, the public is not happy with the change.
Beijing loses billions in taxpayer money
African economies have been under tremendous pressure since the COVID-19 pandemic. Things got worse when the supply lines were destroyed due to the war between Russia and Ukraine. As a result, many African economies defaulted on their debts. And about 40% of that total owes China, according to the World Bank.
Shockingly, the Chinese parted with the aforementioned loans, perhaps as a “show of goodwill.” Chinese Foreign Minister, Wang Yi said Beijing has exempted 23 interest-free loans to 17 African countries.
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The news is understandably welcomed by cash-strapped African nations, many of which see China as their biggest bilateral creditor. About half the continent is either in default or about to default, due to the alarmingly high debt-to-GDP ratio. The world’s poorest countries, mostly in Africa, will have to pay $35 billion in combined debt by 2022.
Bad debt is the biggest reason Beijing has completely scaled back the program. In addition, accusations that China is orchestrating a debt trap have also helped dissuade the Chinese from abandoning projects. In addition, the slowdown in China’s economy and declining exports also play a part.
Chinese banks are unhappy with the CCP
Worsening economic conditions in African countries may have been another reason for Chinese officials to restructure loans. But they’ve given up loans altogether, putting more and more pressure on taxpayers.
“Chinese banks are reluctant to cancel or reduce the principal of bank loans in China,” said Deborah Brautigam, director of the China-Africa Studies Initiative at Johns Hopkins University.
As you know, the authorities are waiving loans, not considering the additional pressure put on banks already struggling due to the financial crisis. stagnant economy When Chinese Communist Party’s New Corona Zero Policy.
These banks will have to raise interest rates to account for the additional costs that will affect the public and ultimately slow down the economy. In conclusion, what the Foreign Minister essentially did was put additional pressure on an already struggling economy, making it interestingly unrewarded..
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The Chinese Communist Party may think it can benefit from helping countries that have given up loans. but, Most African countries already see loans as subsidies, and unless the Chinese government can secure more money, they probably won’t heed China’s demands in the future.
The Chinese Communist Party should focus more on domestic affairs. We have to be creative enough to help reduce exports, pump additional money into our economy, and not waste money gambling abroad.