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China squeezes debt repayments from virus-hit nations

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Amid the psychological rubble of the Covid-19 crisis, strands of China’s ‘New Silk Roads’ have been fused into a web of debt.

What was a high-risk game of loans is now threatening cash-strapped countries as they struggle to combat the deadly coronavirus outbreak.

In short, the Belt and Road Initiative has gone from the jewel in Beijing’s foreign policy crown to what many see as a poison chalice during a catastrophic world event.

“Poor countries, with currencies plummeting, capital fleeing and dire medical costs looming, are in no position to make BRI repayments to China,” Benn Steil and Benjamin Della Rocca, of the Council on Foreign Relations, a New York-based think tank, said last week.

“Although commentators have long likened the BRI to a Marshall Plan for developing nations, the two initiatives could not be more different. The scale of the financing may be comparable (US Marshall aid was worth about US$145 billion in current dollars), but the similarities end there,” they added.

“Marshall aid was all grants, whereas BRI funding – probably around $135 billion – is nearly all debt,” Steil and Rocca wrote in a commentary, entitled Chinese Debt Could Cause Emerging Markets to Implode, for Foreign Affairs.

Launched in a fanfare of state-media hype by President Xi Jinping in 2013, this epic $1 trillion project has become an extension of Beijing’s global ambitions.

At the heart of the program is a network of ‘New Silk Road’ superhighways, connecting China with 70 countries and 4.4 billion people across Asia, Africa, the Middle East and Europe in a maze of multi-billion-dollar infrastructure and high-tech projects.

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