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China Recalibrates “Belt and Road” Lending

AidData, a research lab at William & Mary’s Global Research Institute, released a new report titled “Belt and Road Reboot: Beijing’s Bid to De-Risk Its Global Infrastructure Initiative.” The report details how Beijing has recalibrated its financing of overseas development.

China remains the world’s largest source of international financing for infrastructure development, surpassing both the U.S. and the World Bank. The report outlines China’s strategies for mitigating risks in its lending portfolio. To address distressed debts, short-term measures include emergency lending to debtors and sweeping repayments from borrowers’ cash collateral. Meanwhile, China has been de-risking its overseas investment portfolio by outsourcing risk assessment to Western banks that have “stronger due diligence standards and safeguard policies.”

In the face of soft power challenges, Beijing has adapted its allocation of international aid and credit, emphasizing investment in countries where neither China nor the U.S. holds a dominant soft power advantage. Additionally, Beijing has doubled investment in regions where China has gained reputational favor at the expense of the U.S.

Source: AidData, November 6, 2023