China's Development Finance

Before the launch of China's Belt and Road Initiative in 2013, China and the U.S. were overseas spending rivals. However, China is now outspending the U.S. and other major powers on a more than 2:1 basis. In an average year during the BRI era, China spent $85 billion on their overseas development program, as compared to the U.S.’s $37 billion.

Over the last two decades, China has provided record amounts of international development finance and established itself as a financier of first resort for many low-income and middle-income countries (LMICs), especially for infrastructure projects. The number of “mega-projects”—financed with loans worth $500 million or more—approved each year tripled during the first five years of the Belt and Road Initiative.

In order to share credit risk and support projects that they would not otherwise finance on their own, China’s state-owned banks are increasingly coordinating and collaborating via lending syndicates and other co-financing arrangements. The percentage of Beijing’s overseas lending portfolio that is co-financed has soared and now stands at approximately 32%.