“China is growing more concerned about it not being able to get paid back, so we have seen a pullback in lending that is set to accelerate,” Alicia Garcia-Herrero, the chief economist for Asia-Pacific at the investment bank Natixis, told RFE/RL. “China is also under growing economic pressure at home now and is becoming more hesitant to lend to risky countries. (This) has (opened) a new phase of the BRI.” The BRI has helped make China the world’s largest bilateral lender and seen it give out loans totaling $932 billion since it was established eight years ago, according to data collected by the Green Finance and Development Center at Fudan University in Shanghai, RFE/RL reported.

Loans issued in recent years are turning bad at an unprecedented rate, with research by Rhodium Group, a New York-based research consultancy, showing that the value of Chinese loans that required negotiation soared to $52 billion in 2020 and 2021, a threefold increase from the previous two years. Data compiled by William and Mary’s AidData Lab, which maintains one of the most comprehensive datasets on Chinese development finance, also shows the current scale of the debt crisis, with its research indicating 60 percent of Chinese loans are to countries in financial distress, compared to only 5 per cent in 2010 before the BRI was launched. Other research by AidData shows that 35 percent of the BRI infrastructure projects currently face major implementation problems.

In the face of such pressures, Beijing has begun to issue so-called “rescue loans” to starve off defaults, with AidData showing that tens of billions of dollars have been issued by Chinese state institutions to countries such as Pakistan, Belarus, Egypt, Mongolia, Turkey, and Sri Lanka, to help service their loans and avoid default, RFE/RL reported.