China has become the world’s largest creditor to developing economies, writes Bloomberg. Beijing is now using its own central bank’s massive $3.3 trillion reserves as a source of emergency loans to bail out debt-strapped states, some of which owe China itself.
Such data are provided in the results of a study by World Bank economists, the AidData research project at the College of William and Mary, Harvard University and the Kiel Institute for the World Economy in Germany, the agency notes. The study’s co-author, former World Bank chief economist Carmen Reinhart, criticized China’s central bank policy.
Reinhart said there will be “a very long period of debt hardship for these countries,” and China’s role at this stage “is to avoid solving the problem.”
US officials have issued similar warnings, stressing that Beijing has lured poor countries into a debt trap. “China has come in and created a lot of debt,” White House adviser Amos Hochstein said in late March. According to him, the IMF and other states are now receiving requests for assistance from China’s debtors.
Source: Rosbalt
Mario Twitchell is an accomplished author and journalist, known for his insightful and thought-provoking writing on a wide range of topics including general and opinion. He currently works as a writer at 247 news agency, where he has established himself as a respected voice in the industry.
