Financial TimesFinancial Times

China reckons with its first overseas debt crisis

By James Kynge in London, Kathrin Hille in Taipei, Ben Parkin in Colombo and Jonathan Wheatley in São Paulo

21 Jul 2022 · 11 min read

Editor's Note

The FT reports on an under-appreciated but potentially massive risk to the global economy: China’s immense overseas lending scheme—the Belt and Road Initiative—may be in danger of collapse.

The 350m Lotus Tower that looms over the skyline in Sri Lanka’s capital Colombo is one of the tallest buildings in South Asia. Funded by a Chinese state bank and designed to look like a giant lotus bud about to burst into flower, it was intended to be a metaphor for the flourishing of Sri Lanka’s economy and the “brilliant future” of the bilateral co-operation between Beijing and Colombo.

Instead, the tower has become a symbol of the mounting problems facing China’s overseas lending scheme, the “Belt and Road Initiative”. The construction suffered from lengthy delays and an allegation of corruption levelled by Sri Lanka’s then-president Maithripala Sirisena against one of the Chinese contractors. Now, three years after its official launch, the tower’s amenities including a shopping mall, a conference centre and several restaurants stand either unfinished or largely unused while outside on the streets outrage over Sri Lanka’s financial mismanagement has boiled over into popular protests.

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