Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit

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In 2013, President Xi Jinping announced the launch of his signature policy, the Belt and Road

Initiative, which is the largest transnational infrastructure program ever undertaken by a single country.

It aims to build out global infrastructure and boost China's influence around the world.

Most of the countries that officially signed up are developing nations, many with the weakest credit ratings in the world.

Since 2013, China's cumulative engagement on the project comes to $932 billion, which is made up

of $561 billion in construction contracts and $371 billion in investments.

China has built important infrastructure like power stations, airports, railways and hospitals

all around the world, but also more frivolous items like sports stadiums and expensive skyscrapers, which may not be as helpful

in terms of development in poor nations.

The overall initiative is hugely ambitious, affecting around 65% of the world's population,

covering one-third of the world's GDP, and about a quarter of all of the goods and services

that get moved around the world.

Today, though, many of the loans financing these huge infrastructure projects are going

bad and they're going bad in record numbers.

The total value of loans from Chinese institutions that had to be renegotiated

in 2020 and 2021 rose to $52 billion, which is more than three times the $16 billion

of the prior two years. Now, of course, a lot of this is to be expected, in particular due to the

sudden slowdown that occurred due to the global pandemic. But the worsening situation

in emerging markets right now means that China is not only dealing with its own internal

credit problems, but also with its first international debt crisis.

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