Huge Risk Lurks Behind China's Debt

Summary

AidData's research revealed hidden debts in several countries collaborating with China through the Belt and Road Initiative (BRI). According to AidData, dozens of countries have accumulated US$385 billion in disguised debt. One of them is Indonesia, which has a hidden debt of US$17.28 billion disbursed during 2000-2017, equivalent to 1.6 percent of gross domestic product (GDP).

AidData researcher Brooke Russell noted that some of the debt provided through financing infrastructure projects is not profitable for the debtor countries. Based on AidData's findings, around seven percent of Belt and Road Initiative projects from 2000-2017 faced scandal, controversy, and lawlessness. Indonesia, Pakistan, Malaysia, and Vietnam are the countries that had troubled Belt and Road Initiative projects.

In response, the Deputy for Macroeconomic Coordination and Finance at the Coordinating Ministry for Economic Affairs, Iskandar Simorangkir, stated that the alleged hidden debt was not valid. "It's an investment by a Chinese company. It's not appropriate to say disguised debt. It's Foreign Investment [PMA]," Iskandar said on Tuesday (10/5).

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