Developing countries owe Chinese lenders at least $1.1 trillion, with over half of the loans given by China over the past 20 years being due as many borrowers struggle financially. AidData, a university research lab, found that nearly 80% of China's lending portfolio in the developing world is currently supporting countries in financial distress. This comes as these debts are coming due during a challenging financial climate of high interest rates, struggling local currencies, and slowing global growth. China's lending strategy is changing, with a shift towards providing emergency rescue loans instead of funding big-ticket infrastructure projects. China remains the largest official source of development finance, outspending the US and its G7 partners. However, overall funding commitments from China to the developing world declined at the start of the pandemic, though financing is still in the tens of billions. Chinese infrastructure project lending as a share of total commitments has also decreased, with emergency rescue loans becoming more prominent. This has led to China acting as an "international crisis manager," bailing out borrowers that pose the most risk to Chinese banks. The impact of these troubled loans on China's banking sector is uncertain. China has defended its debt relief record but has also demanded penalties for late repayments and recourse to cash collateral from borrowers.
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