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| Poor Countries Borrowed Billions from China. They Can’t Pay It Back. | Poor Countries Borrowed Billions from China. They Can’t Pay It Back. |
| (about 5 hours later) | |
| As the coronavirus spread around the globe, Pakistan’s foreign minister called his counterpart in Beijing last month with an urgent request: The country’s economy was nose-diving, and the government needed to restructure billions of dollars of Chinese loans. | As the coronavirus spread around the globe, Pakistan’s foreign minister called his counterpart in Beijing last month with an urgent request: The country’s economy was nose-diving, and the government needed to restructure billions of dollars of Chinese loans. |
| Similar requests have come flooding in to Beijing from Kyrgyzstan, Sri Lanka and a number of African nations, asking to restructure, delay repayments or forgive tens of billions of dollars of loans coming due this year. | Similar requests have come flooding in to Beijing from Kyrgyzstan, Sri Lanka and a number of African nations, asking to restructure, delay repayments or forgive tens of billions of dollars of loans coming due this year. |
| With each request, China’s drive to become the developing world’s biggest banker is backfiring. Over the last two decades it unleashed a global lending spree, showering countries with hundreds of billions of dollars, in an effort to expand its influence and become a political and economic superpower. Borrowers put up ports, mines and other crown jewels as collateral. | With each request, China’s drive to become the developing world’s biggest banker is backfiring. Over the last two decades it unleashed a global lending spree, showering countries with hundreds of billions of dollars, in an effort to expand its influence and become a political and economic superpower. Borrowers put up ports, mines and other crown jewels as collateral. |
| Now, as the world economy reels, countries are increasingly telling Beijing they can’t pay the money back. | Now, as the world economy reels, countries are increasingly telling Beijing they can’t pay the money back. |
| China faces difficult choices. If it restructures or forgives these loans, that could strain its financial system and infuriate the Chinese people, who are suffering under their own slowdown. But if China demands repayment when many countries are already angry with Beijing over its handling of the pandemic, its quest for global clout could be at risk. | China faces difficult choices. If it restructures or forgives these loans, that could strain its financial system and infuriate the Chinese people, who are suffering under their own slowdown. But if China demands repayment when many countries are already angry with Beijing over its handling of the pandemic, its quest for global clout could be at risk. |
| “China is politically on the back foot,” said Andrew Small, senior fellow at the German Marshall Fund. Should China foreclose on those loans, he added, “they would be taking over strategic assets in countries that now can’t afford to feed their people.” | “China is politically on the back foot,” said Andrew Small, senior fellow at the German Marshall Fund. Should China foreclose on those loans, he added, “they would be taking over strategic assets in countries that now can’t afford to feed their people.” |
| China’s global reputation is on the line. Countries are openly questioning its role in the coronavirus outbreak, after Chinese officials in January initially downplayed the severity and contagiousness of the disease. Beijing is selling and donating masks and equipment to help its battered image. A misstep could deal its global ambitions a major setback. | China’s global reputation is on the line. Countries are openly questioning its role in the coronavirus outbreak, after Chinese officials in January initially downplayed the severity and contagiousness of the disease. Beijing is selling and donating masks and equipment to help its battered image. A misstep could deal its global ambitions a major setback. |
| At the same time, the financial stakes are huge. The Kiel Institute, a German research group, pegs China’s lending to the developing world at $520 billion or more, with the vast majority doled out in the last few years. That makes Beijing a bigger lender than the World Bank or the International Monetary Fund. | At the same time, the financial stakes are huge. The Kiel Institute, a German research group, pegs China’s lending to the developing world at $520 billion or more, with the vast majority doled out in the last few years. That makes Beijing a bigger lender than the World Bank or the International Monetary Fund. |
| At the forefront of the spree is the Belt and Road Initiative, President Xi Jinping’s $1 trillion program to finance infrastructure projects across the world and pick up allies in the process. Since the initiative started in 2013, China has lent up to $350 billion to countries, about half of them considered high-risk debtors. | At the forefront of the spree is the Belt and Road Initiative, President Xi Jinping’s $1 trillion program to finance infrastructure projects across the world and pick up allies in the process. Since the initiative started in 2013, China has lent up to $350 billion to countries, about half of them considered high-risk debtors. |
| China has dismissed the idea of mass debt forgiveness but signaled that it is willing to negotiate. In some cases it has already acted: The Kyrgyzstan government announced in April that China agreed to reschedule $1.7 billion of debt repayments, without disclosing details. | China has dismissed the idea of mass debt forgiveness but signaled that it is willing to negotiate. In some cases it has already acted: The Kyrgyzstan government announced in April that China agreed to reschedule $1.7 billion of debt repayments, without disclosing details. |
| Others are hoping for relief too. “Not only from China have we requested,” said S.R. Attygalle, Sri Lanka’s secretary to the treasury, in an interview, citing requests to Japan and China’s Export-Import Bank. In the meantime, he said, China Development Bank widened a credit line by $700 million to help Sri Lanka cope, lowered the interest rate and delayed the repayment timeline by two years. | Others are hoping for relief too. “Not only from China have we requested,” said S.R. Attygalle, Sri Lanka’s secretary to the treasury, in an interview, citing requests to Japan and China’s Export-Import Bank. In the meantime, he said, China Development Bank widened a credit line by $700 million to help Sri Lanka cope, lowered the interest rate and delayed the repayment timeline by two years. |
| Beyond those steps, Chinese officials haven’t yet decided how to tackle the problem, say people familiar with some of the deliberations. | Beyond those steps, Chinese officials haven’t yet decided how to tackle the problem, say people familiar with some of the deliberations. |
| Debt relief is “not simple or effective,” Song Wei, an official in the research arm of China’s Ministry of Commerce, wrote in the Global Times, a newspaper controlled by the Communist Party. “What China could do to help is bring projects funded by loans back to life and realize sustainable profits, instead of measures as simple as offering write-offs.” | Debt relief is “not simple or effective,” Song Wei, an official in the research arm of China’s Ministry of Commerce, wrote in the Global Times, a newspaper controlled by the Communist Party. “What China could do to help is bring projects funded by loans back to life and realize sustainable profits, instead of measures as simple as offering write-offs.” |
| Belt and Road had become a sensitive subject before the outbreak. Chinese officials worried whether too many banks and companies were pouring money into the same countries with scant coordination. China’s financial system is already straining under debt accumulated by state-run companies and local governments to keep growth humming. | Belt and Road had become a sensitive subject before the outbreak. Chinese officials worried whether too many banks and companies were pouring money into the same countries with scant coordination. China’s financial system is already straining under debt accumulated by state-run companies and local governments to keep growth humming. |
| Some people in China began questioning whether their hard-earned money was being squandered abroad. Despite China’s growing wealth, its households still have incomes less than a quarter of those in developed countries. Its economy has also been shaken by the outbreak, leading it to shrink for the first time since the Mao era. | Some people in China began questioning whether their hard-earned money was being squandered abroad. Despite China’s growing wealth, its households still have incomes less than a quarter of those in developed countries. Its economy has also been shaken by the outbreak, leading it to shrink for the first time since the Mao era. |
| The lending has drawn scrutiny outside China, too. | The lending has drawn scrutiny outside China, too. |
| China’s loans differ from most other loans to developing countries by rich nations or by institutions like the World Bank. They tend to carry higher interest rates and shorter maturities, requiring refinancing every couple years. They frequently use national assets as collateral. Those features gave Chinese state-controlled banks the confidence to lend to poor countries. | China’s loans differ from most other loans to developing countries by rich nations or by institutions like the World Bank. They tend to carry higher interest rates and shorter maturities, requiring refinancing every couple years. They frequently use national assets as collateral. Those features gave Chinese state-controlled banks the confidence to lend to poor countries. |
| In some places, lending has soared. Djibouti’s debts to China jumped to more than 80 percent of its annual economic output. Ethiopia’s debt to China totals 20 percent of its annual output. In Kyrgyzstan, the amount is about 40 percent. | In some places, lending has soared. Djibouti’s debts to China jumped to more than 80 percent of its annual economic output. Ethiopia’s debt to China totals 20 percent of its annual output. In Kyrgyzstan, the amount is about 40 percent. |
| The Trump administration has accused China of “debt trap diplomacy,” lending more money than poor countries could afford to seize strategic assets and to expand its military and economic footprint. | The Trump administration has accused China of “debt trap diplomacy,” lending more money than poor countries could afford to seize strategic assets and to expand its military and economic footprint. |
| Beijing denies these accusations, and many Chinese experts agree. Seizing collateral overseas is difficult, they argue. Loans cost more because Chinese lenders face the real prospect of not getting paid back. | Beijing denies these accusations, and many Chinese experts agree. Seizing collateral overseas is difficult, they argue. Loans cost more because Chinese lenders face the real prospect of not getting paid back. |
| “A lot of the loans should have higher interest rates that should reflect the correct risk,” said Chen Long, a partner at Plenum, a Beijing economic analysis firm. | “A lot of the loans should have higher interest rates that should reflect the correct risk,” said Chen Long, a partner at Plenum, a Beijing economic analysis firm. |
| But an anti-China backlash has grown in recent years as countries struggled to pay off debts. Belt and Road projects have often proven unprofitable, leaving taxpayers with hefty bills. When Beijing seized a strategic seaport in Sri Lanka as collateral, debtor nations watched with concern. | But an anti-China backlash has grown in recent years as countries struggled to pay off debts. Belt and Road projects have often proven unprofitable, leaving taxpayers with hefty bills. When Beijing seized a strategic seaport in Sri Lanka as collateral, debtor nations watched with concern. |
| Updated June 24, 2020 | |
| Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. | |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| China also relied on a secretive web of bilateral negotiations for Belt and Road, to line officials’ pockets or get them to agree to unreasonable terms, some debtor countries claim. Malaysia pushed back on a $16 billion loan package, pressuring Beijing to cut it to $11 billion. | China also relied on a secretive web of bilateral negotiations for Belt and Road, to line officials’ pockets or get them to agree to unreasonable terms, some debtor countries claim. Malaysia pushed back on a $16 billion loan package, pressuring Beijing to cut it to $11 billion. |
| Now it appears Beijing underestimated the risk that severe credit problems might afflict all developing countries at the same time. China still insists on dealing with its debtor countries individually. But leaders in those places are increasingly calling for broad global efforts to help with their problems. | Now it appears Beijing underestimated the risk that severe credit problems might afflict all developing countries at the same time. China still insists on dealing with its debtor countries individually. But leaders in those places are increasingly calling for broad global efforts to help with their problems. |
| “China wants to keep Belt and Road countries divided, as they are stronger than each country individually,” said Benn Steil, the director of international economics at the Council of Foreign Relations. | “China wants to keep Belt and Road countries divided, as they are stronger than each country individually,” said Benn Steil, the director of international economics at the Council of Foreign Relations. |
| In April, Pakistan’s prime minister appealed to wealthy countries and institutions for debt relief for all developing nations. Two weeks later, the Group of 20 nations, which includes China, announced it would freeze all debt payments for the world’s poorest countries until the end of the year. | In April, Pakistan’s prime minister appealed to wealthy countries and institutions for debt relief for all developing nations. Two weeks later, the Group of 20 nations, which includes China, announced it would freeze all debt payments for the world’s poorest countries until the end of the year. |
| But Mr. Song, the Commerce Ministry official, wrote in the Global Times that preferential loans from the Export-Import Bank of China are “not applicable for debt relief.” The Export-Import Bank of China is Belt and Road’s money pot, financing more than 1,800 projects worth at least $149 billion, the lender revealed last year. | But Mr. Song, the Commerce Ministry official, wrote in the Global Times that preferential loans from the Export-Import Bank of China are “not applicable for debt relief.” The Export-Import Bank of China is Belt and Road’s money pot, financing more than 1,800 projects worth at least $149 billion, the lender revealed last year. |
| The pressure on China will only increase as the global economic crisis deepens. Officials familiar with the debt negotiations said many countries are demanding China provide debt relief or forgiveness, including a number of African countries. | The pressure on China will only increase as the global economic crisis deepens. Officials familiar with the debt negotiations said many countries are demanding China provide debt relief or forgiveness, including a number of African countries. |
| Ethiopia, Africa’s fastest-growing economy, has asked China to cancel part of its debt load and is taking a lead role on behalf of African nations in negotiations, several officials said. | Ethiopia, Africa’s fastest-growing economy, has asked China to cancel part of its debt load and is taking a lead role on behalf of African nations in negotiations, several officials said. |
| “These are early days. But I know the Chinese have generally been recognizing of the challenges that countries are in,” said the state minister of finance Eyob Tekalign Tolina in an interview, adding that a bloc of the “least developed” African countries have called for debt cancellation. “Given the overall global shock and the pandemic’s effect on growth, this is a call for support,” he said. | “These are early days. But I know the Chinese have generally been recognizing of the challenges that countries are in,” said the state minister of finance Eyob Tekalign Tolina in an interview, adding that a bloc of the “least developed” African countries have called for debt cancellation. “Given the overall global shock and the pandemic’s effect on growth, this is a call for support,” he said. |
| But Ghana’s finance minister, Ken Ofori-Atta, said in a video interview with the Center for Global Development that China needed to do more and “come on stronger.” | But Ghana’s finance minister, Ken Ofori-Atta, said in a video interview with the Center for Global Development that China needed to do more and “come on stronger.” |
| Chinese officials insist that they will continue to do projects in the developing world. Pakistan last week awarded a $5.8 billion dam-building contract to a Chinese state-owned company’s joint venture with the commercial unit of the Pakistani army. Financing details weren’t released. | Chinese officials insist that they will continue to do projects in the developing world. Pakistan last week awarded a $5.8 billion dam-building contract to a Chinese state-owned company’s joint venture with the commercial unit of the Pakistani army. Financing details weren’t released. |
| But if China strikes hard bargains, debtor nations could band together and try to present a united front. They could reveal the extent of their Chinese loans and their terms and conditions, which could put even more focus on the problem. Other countries could shift how they lend, which could force China to change its ways or ease back. | But if China strikes hard bargains, debtor nations could band together and try to present a united front. They could reveal the extent of their Chinese loans and their terms and conditions, which could put even more focus on the problem. Other countries could shift how they lend, which could force China to change its ways or ease back. |
| “It’s a reckoning for China,” said Scott Morris, a senior fellow at the Center for Global Development, a think tank. | “It’s a reckoning for China,” said Scott Morris, a senior fellow at the Center for Global Development, a think tank. |
| “When you look at the breadth and scope of the countries that may default, it could be a very high risk for China. Will they take an inevitable write-down on some of these debts? Or will they be willing to seize countries’ assets during such a sensitive time?” | “When you look at the breadth and scope of the countries that may default, it could be a very high risk for China. Will they take an inevitable write-down on some of these debts? Or will they be willing to seize countries’ assets during such a sensitive time?” |
| Salman Masood and Simon Marks contributed reporting. | Salman Masood and Simon Marks contributed reporting. |