The China in Africa Podcast Understanding China's Role in the Developing World Debt Crisis (Part 2)
Apr 28, 2023
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Debunking the Chinese Debt Trap
- The Chinese debt trap narrative ignores recipient countries' agency and demand for loans.
- Chinese lenders seek profits and avoid non-repayment, often preferring restructuring over cancellations.
China's Debt Restructuring Approach
- China resists outright debt cancellation but is flexible with rescheduling and extending loan maturities.
- Debt restructuring aims to reduce burden and attract new financing for developing countries' growth.
Complexity of Domestic Debt Holders
- Domestic debt held by non-residents complicates debt restructuring in countries like Zambia and Ghana.
- Differentiating holders is difficult and may be legally problematic, complicating restructuring efforts.