How to Lure Chinese Financing Back to the Global South: Report

China’s first overseas bullet train in Indonesia sees Malaysians the largest foreign passengers, shaping Whoosh’s and Belt and Road role.
File image of Indonesia's high speed railway that was built and financed by China. TIMUR MATAHARI / AFP

Global South countries face increasing financing pressure, endangering their ability to keep developing while also implementing measures to deal with a growing climate crisis. The disruption of global trade is coupled with a larger megatrend: flows of international capital to the developing world have turned negative. This means that countries are now routinely paying more to service loans than they receive in disbursements.

The vast majority of Global South borrowers now pay more back to China than they’re receiving in funding. Graph: Boston University Global Development Policy Center

China is one of the Global South’s most important development lenders. The current crisis partly grows from high levels of lending during the 2010s, with many of those loans now coming due. Chinese loans are more closely correlated with economic growth than those from traditional multilateral development banks.

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by Cobus van Staden

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