BEIJING — When Suriname couldn’t make its debt payments, a Chinese state bank seized the money from one of the South American country’s accounts.
As Pakistan has struggled to cope with a devastating flood that has inundated a third of the country, its loan repayments to China have been rising fast.
When Kenyans and Angolans went to the polls in presidential elections in August, the countries’ Chinese loans, and how to repay them, were a hot-button political issue.
Across much of the developing world, China finds itself in an uncomfortable position, a geopolitical giant that now holds significant sway over the financial futures of many nations but is also owed huge sums of money that may never be repaid in full.
the lender of choice for many nations over the past decade, doling out funds for governments to build bullet trains, hydroelectric dams, airports and superhighways. As inflation has climbed and economies have weakened, China has the power to cut them off, lend more or, in its most accommodating moments, forgive small portions of their debts.
The economic distress in poor countries is palpable, given the lingering effects of the pandemic, coupled with high food and energy prices after Russia’s invasion of Ukraine. Many borrowed heavily from China. In Pakistan, overall public debt has more than doubled over the past decade, with loans from China growing fastest; in Kenya, public debt is up ninefold and in Suriname tenfold.
two hydroelectric dams in southern Patagonia. Bradley Parks, the executive director of AidData, a research institute at William and Mary, a university in Williamsburg, Va., estimated that Argentina’s twice-a-year interest payment was $87 million in January and $137 million in July.
Argentina will owe a payment of over $170 million on the loan in January if interest rates keep rising at the same pace, he calculated. Argentina’s finance ministry did not respond to emails and text messages about the loan.
According to the I.M.F., three-fifths of the world’s developing countries are now having considerable trouble repaying loans or have already fallen behind on their debts. More than half the world’s poor countries owe more to China than to all Western governments combined.
For now, Chinese officials in poor countries face unpleasant jobs as debt collectors.
“You have a lot more influence when you’re providing the loan,” said Brad Setser, an international payments specialist at the Council on Foreign Relations, “than when you’re begging for repayment.”