Your Wednesday Briefing: China’s Billions in Bailouts
03/28/2023
China steps in with bailouts
For decades, the International Monetary Fund and the United States were the world’s lenders of last resort. Now China is stepping in to provide more emergency loans to countries, including Turkey, Argentina and Sri Lanka.
While China still lags the I.M.F. in terms of cash disbursed, it is catching up fast. In 2021, emergency financing provided by Beijing totaled $40.5 billion, up from $10 billion in 2014 and zero in 2010, according to a new study by American and European experts who drew on statistics from AidData, a research institute in the U.S. For comparison, the I.M.F. lent $68.6 billion to countries in financial distress in 2021.
In many ways, China has replaced the U.S. as the go-to source for bailouts. The last sizable U.S. rescue loan to a middle-income country was a $1.5 billion credit to Uruguay in 2002. China often prioritizes countries that have either strategic significance or numerous natural resources.
Debt trap: Many countries that have been borrowing heavily from Beijing for years to pay for infrastructure are now struggling to pay their debts. American officials have accused China of engaging in “debt trap diplomacy” by saddling countries with excessive debt for construction projects carried out by Chinese companies.
Higher rates: China charges somewhat high interest rates for emergency credit to middle-income countries in distress, typically 5 percent. That compares with 2 percent for loans from the I.M.F., the new study found. China’s emergency loans have gone almost entirely to middle-income countries that owe a lot of money to state-controlled Chinese banks.
Domestic worries: China may soon face a debt crisis of its own, our New New World columnist writes. Chinese local governments that have borrowed heavily for big infrastructure projects are in financial disarray, their coffers depleted from enforcing China’s strict pandemic policies. Still, they keep spending.
A shake-up at Alibaba
Alibaba, China’s e-commerce giant, will reorganize into six different business groups organized under a holding company.
The move reflects the government’s concerns about the power of China’s tech giants. Alibaba has been a cautionary tale about the risks of challenging the country’s ruling Communist Party, which has worked to bring large companies to heel.
Context: The government appears to be relaxing its regulatory stronghold on the technology sector after a tumultuous three years — a period marked by the disappearance of Alibaba’s multibillionaire founder, Jack Ma, from the public eye.
This week he returned to mainland China after a yearlong absence, after criticizing Chinese regulators in 2020 for stifling innovation. Regulators fined Alibaba $2.8 billion in 2021 for abusing its dominance, among other penalties.
Takeaway: As China’s economy struggles to regain momentum post-zero Covid, Beijing wants to show it is focused on jump-starting the economy.
Russia’s eastern push levels city
The shelling barely stops in Avdiivka, a city in eastern Ukraine where residents huddle in basements.
Russian efforts to capture Avdiivka, which began over a year ago, have escalated in recent weeks. A team of New York Times reporters traveled there just hours before the Ukrainian military declared it off-limits to journalists. They found a wasteland.
Out of a prewar population of 30,000 people, residents say only hundreds still live in Avdiivka.
Other developments from the war:
The head of the U.N. nuclear watchdog has raised alarm about the safety risks at the Zaporizhzhia Nuclear Power Plant, which is controlled by Russian forces. He plans to visit the facility this week. Read an insider’s account of the turmoil inside the plant.
Belarus, a close ally to Russia that borders Ukraine, is willing to host Russian nuclear weapons, the country’s Foreign Ministry said.
The International Olympic Committee declined to make a decision on whether Russian and Belarusian athletes will be allowed to compete in the 2024 Games.
THE LATEST NEWS
Asia Pacific
The U.S. and Japan reached a trade deal over minerals used to make electric vehicle batteries.
North Korea’s state media released photos of new nuclear warheads, Reuters reports.
The junta in Myanmar dissolved the political party led by the ousted leader Aung San Suu Kyi, The Associated Press reports.
Around the World
A fire in a Mexican migrant detention center near the U.S. border killed at least 39 people.
Prime Minister Benjamin Netanyahu will be welcomed at the White House in the coming months, after he agreed to delay his contentious overhaul of Israel’s judiciary.
Former vice president Mike Pence must testify before a grand jury investigating Donald Trump’s attempts to overturn the 2020 election, a judge ruled.
Protests seized France as neither President Emmanuel Macron nor opponents of his pension overhaul backed down.
Two people were killed in a knife attack at a Muslim center in Lisbon.
Business and finance
Sam Bankman-Fried was charged with foreign bribery for overseeing a $40 million payment to Chinese officials to help unfreeze trading accounts.
U.S. bank regulators defended their response to the collapse of Silicon Valley Bank during a Senate hearing.
ChatGPT is worrying some workers who wonder if A.I. will take their jobs.
A Morning Read
The latest viral trend on TikTok is defending TikTok. After U.S. lawmakers grilled the platform’s chief executive, Shou Chew, last week, TikTok users rallied and argued that the app should not be banned in the U.S. “Fancams” of Chew have appeared along with messages of support: “shou zi chew didn’t chew he devoured,” read one.
ARTS AND IDEAS
Revisiting Tomb Sweeping Day
For the annual holiday of Qingming, known as Tomb Sweeping Day in English, extended families gather to honor the departed, clean ancestors’ graves and feast in a Chinese folk practice that dates back 2,500 years.
But the act of sweeping tombs is becoming obsolete as the tombs themselves are being phased out. In recent decades, governments across East and Southeast Asia have pushed for cremation to replace tomb burials. Others have razed cemeteries. The shift is especially prevalent in Taiwan and seaside cities like Hong Kong, where burial land is scarce and tombs are expensive. Most families now house ashes inside columbariums, structures that can store thousands of cremation urns inside a small space.
At a columbarium, there is little to sweep and not enough space for elaborate altar spreads. A traditional whole roasted pig becomes a single slab of crispy pork belly. It’s now common to see packaged food and even fast food on these altars.
But for some of the older generation, it’s important to make an effort with home-cooked offerings. “McDonald’s is not going to cut it,” said Nancy Fam, 93. “The spirits will be tortured.”
PLAY, WATCH, EAT
What to Cook
This creamy Meyer lemon pasta uses the whole fruit.
What to Watch
Zhang Yimou’s “Cliff Walkers” and Yoo Ha’s slapstick “Pipeline” are two of five action movies to stream now.
What to read
“The Great Reclamation” is stunning historical fiction set against the backdrop of Singapore’s struggle for independence.
Travel
How to plan a multigenerational trip everyone will enjoy.
Now Time to Play
Play the Mini Crossword, and a clue: Not serious (five letters).
Here are the Wordle and the Spelling Bee.
You can find all our puzzles here.
That’s it for today’s briefing. See you next time. — Mariah
P.S. The last U.S. troops left Vietnam 50 years ago today.
“The Daily” is about the fight over a police training center in Atlanta.
We and our partners use cookies on this site to improve our service, perform analytics, personalize advertising, measure advertising performance, and remember website preferences.Ok
Home » Analysis & Comment » Your Wednesday Briefing: China’s Billions in Bailouts
Your Wednesday Briefing: China’s Billions in Bailouts
China steps in with bailouts
For decades, the International Monetary Fund and the United States were the world’s lenders of last resort. Now China is stepping in to provide more emergency loans to countries, including Turkey, Argentina and Sri Lanka.
While China still lags the I.M.F. in terms of cash disbursed, it is catching up fast. In 2021, emergency financing provided by Beijing totaled $40.5 billion, up from $10 billion in 2014 and zero in 2010, according to a new study by American and European experts who drew on statistics from AidData, a research institute in the U.S. For comparison, the I.M.F. lent $68.6 billion to countries in financial distress in 2021.
In many ways, China has replaced the U.S. as the go-to source for bailouts. The last sizable U.S. rescue loan to a middle-income country was a $1.5 billion credit to Uruguay in 2002. China often prioritizes countries that have either strategic significance or numerous natural resources.
Debt trap: Many countries that have been borrowing heavily from Beijing for years to pay for infrastructure are now struggling to pay their debts. American officials have accused China of engaging in “debt trap diplomacy” by saddling countries with excessive debt for construction projects carried out by Chinese companies.
Higher rates: China charges somewhat high interest rates for emergency credit to middle-income countries in distress, typically 5 percent. That compares with 2 percent for loans from the I.M.F., the new study found. China’s emergency loans have gone almost entirely to middle-income countries that owe a lot of money to state-controlled Chinese banks.
Domestic worries: China may soon face a debt crisis of its own, our New New World columnist writes. Chinese local governments that have borrowed heavily for big infrastructure projects are in financial disarray, their coffers depleted from enforcing China’s strict pandemic policies. Still, they keep spending.
A shake-up at Alibaba
Alibaba, China’s e-commerce giant, will reorganize into six different business groups organized under a holding company.
The move reflects the government’s concerns about the power of China’s tech giants. Alibaba has been a cautionary tale about the risks of challenging the country’s ruling Communist Party, which has worked to bring large companies to heel.
Context: The government appears to be relaxing its regulatory stronghold on the technology sector after a tumultuous three years — a period marked by the disappearance of Alibaba’s multibillionaire founder, Jack Ma, from the public eye.
This week he returned to mainland China after a yearlong absence, after criticizing Chinese regulators in 2020 for stifling innovation. Regulators fined Alibaba $2.8 billion in 2021 for abusing its dominance, among other penalties.
Takeaway: As China’s economy struggles to regain momentum post-zero Covid, Beijing wants to show it is focused on jump-starting the economy.
Russia’s eastern push levels city
The shelling barely stops in Avdiivka, a city in eastern Ukraine where residents huddle in basements.
Russian efforts to capture Avdiivka, which began over a year ago, have escalated in recent weeks. A team of New York Times reporters traveled there just hours before the Ukrainian military declared it off-limits to journalists. They found a wasteland.
Out of a prewar population of 30,000 people, residents say only hundreds still live in Avdiivka.
Other developments from the war:
The head of the U.N. nuclear watchdog has raised alarm about the safety risks at the Zaporizhzhia Nuclear Power Plant, which is controlled by Russian forces. He plans to visit the facility this week. Read an insider’s account of the turmoil inside the plant.
Belarus, a close ally to Russia that borders Ukraine, is willing to host Russian nuclear weapons, the country’s Foreign Ministry said.
The International Olympic Committee declined to make a decision on whether Russian and Belarusian athletes will be allowed to compete in the 2024 Games.
THE LATEST NEWS
Asia Pacific
The U.S. and Japan reached a trade deal over minerals used to make electric vehicle batteries.
North Korea’s state media released photos of new nuclear warheads, Reuters reports.
The junta in Myanmar dissolved the political party led by the ousted leader Aung San Suu Kyi, The Associated Press reports.
Around the World
A fire in a Mexican migrant detention center near the U.S. border killed at least 39 people.
Prime Minister Benjamin Netanyahu will be welcomed at the White House in the coming months, after he agreed to delay his contentious overhaul of Israel’s judiciary.
Former vice president Mike Pence must testify before a grand jury investigating Donald Trump’s attempts to overturn the 2020 election, a judge ruled.
Protests seized France as neither President Emmanuel Macron nor opponents of his pension overhaul backed down.
Two people were killed in a knife attack at a Muslim center in Lisbon.
Business and finance
Sam Bankman-Fried was charged with foreign bribery for overseeing a $40 million payment to Chinese officials to help unfreeze trading accounts.
U.S. bank regulators defended their response to the collapse of Silicon Valley Bank during a Senate hearing.
ChatGPT is worrying some workers who wonder if A.I. will take their jobs.
A Morning Read
The latest viral trend on TikTok is defending TikTok. After U.S. lawmakers grilled the platform’s chief executive, Shou Chew, last week, TikTok users rallied and argued that the app should not be banned in the U.S. “Fancams” of Chew have appeared along with messages of support: “shou zi chew didn’t chew he devoured,” read one.
ARTS AND IDEAS
Revisiting Tomb Sweeping Day
For the annual holiday of Qingming, known as Tomb Sweeping Day in English, extended families gather to honor the departed, clean ancestors’ graves and feast in a Chinese folk practice that dates back 2,500 years.
But the act of sweeping tombs is becoming obsolete as the tombs themselves are being phased out. In recent decades, governments across East and Southeast Asia have pushed for cremation to replace tomb burials. Others have razed cemeteries. The shift is especially prevalent in Taiwan and seaside cities like Hong Kong, where burial land is scarce and tombs are expensive. Most families now house ashes inside columbariums, structures that can store thousands of cremation urns inside a small space.
At a columbarium, there is little to sweep and not enough space for elaborate altar spreads. A traditional whole roasted pig becomes a single slab of crispy pork belly. It’s now common to see packaged food and even fast food on these altars.
But for some of the older generation, it’s important to make an effort with home-cooked offerings. “McDonald’s is not going to cut it,” said Nancy Fam, 93. “The spirits will be tortured.”
PLAY, WATCH, EAT
What to Cook
This creamy Meyer lemon pasta uses the whole fruit.
What to Watch
Zhang Yimou’s “Cliff Walkers” and Yoo Ha’s slapstick “Pipeline” are two of five action movies to stream now.
What to read
“The Great Reclamation” is stunning historical fiction set against the backdrop of Singapore’s struggle for independence.
Travel
How to plan a multigenerational trip everyone will enjoy.
Now Time to Play
Play the Mini Crossword, and a clue: Not serious (five letters).
Here are the Wordle and the Spelling Bee.
You can find all our puzzles here.
That’s it for today’s briefing. See you next time. — Mariah
P.S. The last U.S. troops left Vietnam 50 years ago today.
“The Daily” is about the fight over a police training center in Atlanta.
We welcome your feedback. You can reach us at [email protected].
Source: Read Full Article