LONDON : From a $360 million project to expand Zambia's international airport in Lusaka to a $1.4 billion city port in Sri Lanka's capital of Colombo, China is the missing piece in the puzzle of a number of debt talks under way in developing markets.
Now, the pressure is rising on China to take a more active role in helping strained economies overhaul their debt burdens. Leaders of the Group of Seven rich democracies on Tuesday called on China specifically when urging creditors to help countries. "Chinese 'Belt and Road' money is everywhere – so we will see this over and over in sovereign debt restructurings," said Dennis Hranitzky, head of sovereign litigation at law firm Quinn Emanuel.
"Bringing China to the negotiating table in a timely manner could be the biggest challenge in the upcoming debt restructurings."Chinese lending is mostly extended by state-controlled agencies and policy banks and is often opaque. Data compiled over three years by AidData, a U.S. research lab at the College of William & Mary, found terms of Chinese state-owned banks' loans require borrowers to prioritise them for repayment.
Sri Lanka's talks are moving faster, with the IMF confirming it is on track for a new programme. China's approach, though, is not yet clear.