One Belt One Road Initiative and China’s Overseas Lending

This chapter is the first attempt to provide an overview of China’s state-administered lending to the participating countries of the One Belt One Road (OBOR) Initiative. China’s loans to OBOR countries have increased rapidly after the launch of the OBOR scheme. Central and Western Asia, South Asia, Eastern Europe, and Africa are among the largest borrowers from China. The outbound Chinese loans go more to those OBOR countries with a smaller economy size, better rule of law and political stability, and a higher political synergy with China. China’s massive overseas lending has aroused a widespread suspicion about China’s debt-trap diplomacy tactic. Our research helps shed some light on this issue. We find that OBOR countries with lower foreign reserves and higher budget deficits have borrowed more, which creates concerns over debt sustainability. Nevertheless, we concur with many existing academic studies in that it is baseless to claim that China deliberately brings poorer countries into debt trap in order to expand its geopolitical and economic interests globally. For the continuation of the OBOR program, however, it is imperative that China enhances the transparency of its intentions and practices in overseas lending under OBOR.