The power of the so-called “China Money” is growing. This is because China is rapidly emerging as the largest creditor by increasing bailouts for emerging countries on the verge of bankruptcy. It even surpasses the status of the “final lender” that the International Monetary Fund (IMF) and the United States have held since World War II. In other words, it is breaking the “dollar hegemony” with enormous capital and increasing the international influence of the yuan.
“China Money” Spreading in Debt-Flooded Countries
The New York Times (NYT) reported on the 27th (local time) that China provided 128 emergency funds to 22 debt-ridden countries between 2000 and 2021 amounted to USD 240 billion, adding, “Beijing is emerging as a new big shot to fund emerging economies.” Based on data from “Aid Data,” a research institute at William & Mary University in the U.S., the World Bank, Harvard University’s Kennedy School, and Germany’s Keel Institute of the World Economic Research examined China’s bailout loans for the first time.
As a result, China’s emergency fund loans, which were nonexistent in 2010, surged to USD 40.5 billion in 2021. In the same year, the IMF lent 68.6 billion dollars. In other words, China is spraying money to countries in debt, which the NYT described as “China is catching up with the IMF at a rapid pace.”
In particular, it was found that the U.S. has already surpassed the status of the U.S. in middle and low-income countries with high debts. Uruguay in 2002 was the last time the U.S. provided large-scale bailout funds to other countries. “We are witnessing the emergence of another bailout ‘big hand’ in the international financial market,” said Christophe Treveschkeil, head of research at the World Economic Research Institute.