Whilst the U.S. debt to China is $1.10 trillion as of October 2019, the debt is considered fine since it is about 27% of the country’s GDP.
The case is different for most developing countries, particularly Africa. Here are the top ten African countries with the largest Chinese “estimated” debt:
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- Angola: over (US$25 billion).
- Ethiopia: (US$13.5 billion).
- Kenya: (US$7.9 billion).
- Congo-Brazzaville: (US$7.3 billion)
- North Sudan: over (US$6.4 billion)
- Zambia: (US$6 billion)
- Cameroon: (US$5.5 billion).
- Nigeria: (US$4.8 billion).
- Ghana: (US$3.5 billion).
- DRC: (US$3.4 billion).
Iwata (2017) and Were (2018) evaluated the debt sustainability in Africa and the Chinese approach to Africa respectively and concluded that Chinese initiatives, especially the Belt and Road Initiative (BRI) may not be sustainable.
In some countries, China is taking over some firms as part of repayment plans. Other countries are offering natural resources including oil and diamonds whilst others have accepted the yuan as a reserve currency.
This is in sync with Scobell et al (2017)’s observation revealed that the government of Sri Lanka ended adopting a policy of trading Chinese debt for financial stakes in its enterprises so as to service a $64 billion-dollar debt which has been shedding 95% of government revenues, for 99 years, which is unsustainable.