China has become a lender of last resort almost on the level of the IMF. At first glance this would be to smaller and mid sized countries that are China’s very good consumers.
The reality is the US/Mexico industrial build up will displace China’s goods in those markets.
China does not even have the water resources to maintain an outward looking industrial policy. China is mainly turning inward.
But here the alarm bells are going off in this NYT article.
Unlike the U.S., which donates money to countries, China lends to countries. China has lent $900 billion to 151 lower-income countries around the world, mainly for the construction of highways, bridges, hydroelectric dams and other infrastructure.
China’s emergency lending has gone almost entirely to middle-income countries that owe a lot of money to state-controlled Chinese banks. (Copied from the article you linked.)
So China is lending money, the borrowers get into trouble because the loans are adjustable-rate, then China lends more money to provide the means of paying the interest on the earlier loans in order to protect Chinese banks.
They aren’t doing any of this lending out of the kindness of their hearts.
Wendy
When successful the loans build China’s image in these countries. When they fail China gets power to negotiate terms. That can influence various aspects within the country.
Bottom line. China can use these funds to build influence internationally.
I am sure larger parts of the loans are bribes to cronies that own building companies etc in the countries receiving the monies. It is self perpetuating. Eventually China loses all of that money as those countries are more likely to renege in several different ways. Then China becomes an unspoken military threat. Not that China will use the military to gain access to assets. Those countries will see Chinese dominance as a threat to their independence.
The story echoes earlier US dominance which led to our supply side econ period.
The US “gifts” USD with egregious strings attached. Onerous enough that the US AID has a poor reputation amongst many locals.
The L&Ss of the country “take the gift, and “bank” it”. The locals rarely see much real benefit.
The Chinese build actual infrastructure that directly benefits the locals.