Murky Contracts, $385 Bn Hidden Debt: China Infrastructure Drive Is Trapping Poor Nations, Report Says

About 70 per cent of China's BRI fund has been lent to state banks or as joint ventures between Chinese businesses and local partners

Picture taken on February 8, 2020 shows a part of the first rail line linking China to Laos, a key part of Beijing's 'Belt and Road' project across the Mekong, in Luang Prabang. (AFP Photo)

New Delhi: A new study has found that China's foreign infrastructure policy has pushed poorer nations into "hidden debt" worth $385 billion. Over a third of the projects have been hit by alleged corruption scandals and protests, an AFP report said Wednesday, quoting a study.

According to the study done by AidData, which is based at the College of William and Mary in Virginia, US, under Chinese President Xi Jinping's ambitious investment plan, the Belt and Road Initiative, over $843 billion has been invested in building roads, bridges, ports, etc in countries across Africa and Central Asia.

About 70 per cent of the fund has been lent to state banks or as joint ventures between Chinese businesses and local partners.

The report says that many of the countries could not take on any more debt so the Chinese had used methods to hide the debt.

Brad Parks, Executive Director, AidData, said a "constellation of actors other than central governments" was used, which was often backed by a government guarantee. These loans, therefore, do not appear in the country’s balance sheet.

"The contracts are murky, and governments themselves don't know the exact monetary values they owe to China," said Parks in a report by AFP.

Recently, the Zambian government also disclosed that the country owes $6.6 billion to the Chinese public and private lenders.

But there seems to be growing resentment against Chinese intervention and many foreign lenders who were earlier keen to join the programme are now cancelling Chinese infrastructure project due to debt concerns.