The huge amount of long-term loans that China gives to poor countries, especially in Africa, poses a “grave risk” of plunging the world into another financial crisis. German Chancellor Olaf Schulz warned on Friday against this.
“There remains a serious risk of another major debt crisis in the countries of the South, as a result of loans made by China, which are not being supervised due to the many actors involved,” Schulz said in Stuttgart.
This would plunge China and the countries of the South into a major economic and financial crisis and would not spare the rest of the world. So it’s a serious concern.”
“debt trap”
The West has long accused China of using the “debt trap” to gain influence over other countries. The argument is that China lends money to other countries in the long run, which eventually lose control of important assets if they fail to repay the loans.
Beijing rejects those accusations and says the loans are aimed at fighting poverty.
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