China under pressure to recover developing country loans
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.
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