Photo Credit: Christian Haugen/CC by 2.0
World Bank economists assessed that China accounted for 35% of Laos’ public debt in 2012. They claimed this figure rose to around 44% by 2015. Public debt is now at an estimated 68% of gross domestic product (GDP). Around half of the borrowed money is from China.
This level of exposure to one creditor is a severe risk. It leaves Laos subject to major losses if China’s economy slows. It leaves the country heavily reliant on Beijing. China could use the situation to wield greater influence over Laos.
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