China is stopping money and is starting to charge it. They are not good news for Spain

The golden age of Chinese financing is over. Beijing no longer gives money to build ports and railroads, now it is demanding payment of what it lent at the time.

Why is it important. China has lent more than 800,000 million dollars to 150 countries since 2013 With its initiative of the ‘Silk route‘. Today, 60% of that portfolio is in the hands of technical bankruptcy or on the edge of the financial collapse.

The facts. The money that countries must return to China every year already exceed the “new” money that China lends. It is the end of the expansive model of the last decade: the country is going from being a generous lender to becoming a relentless creditor.

The strategy. China has divided its debtors into two categories, and each group applies a radically different treatment:

• Large countries with huge debts (80% of the portfolio): They receive bailouts, bridge loans and special facilities. Pakistan, Sri Lanka, Venezuela, Argentina, Angola …
• Small countries with minor debts (Remaining 20%): Only payment extensions. Zero money new. Zambia, Ghana, Mongolia, Tayikistan, Republic of Congo …

Of course, the treatment that the first group receives has nothing to do with generosity but with self -preservation. China is rescuing those who, to break, could make their state banks sink.

The rest are abandoned to their fate.

The context. The crisis began soon. Specifically in 2015, two years after starting this strategy, when the prices of some raw materials collapsed.

Covid accelerated the problems, as well as the war in Ukraine. The rise in interest rates at a global level It was the lace.

The money trail. China is replicating the Western Banks Manual of the 1980s and nineties, when Wall Street and the City massively lent petrodollars after the oil crises of the seventies. When the eighties debt crisis arrived, they went from financing development to demand structural adjustment programs.

The same banks that had pushed indebtedness became the toughest creditors. China is in that transition: of “Strategic Development Partner” to creditor which prioritizes their banking balances on the stability of debtor countries. It is the market, friend.

Deepen. For Spain, the change has three impact vectors:

1. The big construction and Spanish engineering (ACS, Actiona, Sacyr) lose access to megaprojects financed by Chinese banks, especially in Infrastructure in Africa and Asia.
2. Direct Chinese investment in Spain will be more selective: less strategic purchases and more demand for immediate profitability in sectors such as energy and technology.
3. Financial instability in African and Latin American countries where Spanish companies (Telefónica, Iberdrola, Repsol) operate increases political and exchange risk, complicating its operations in markets that depended on Chinese financial oxygen.

In summary. China has completed its emerging power metamorphosis to established power, and its financial policy reflects it.

• The Silk Route was the last great expansive project of a country that sought global influence buying loyalty with cheap money.
• Now that it has that influence, it acts like any mature creditor: charging.

It is the end of an era and the beginning of a more predictable global financial order, but also more ruthless.

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