China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries.
Chinese officials signaled Saturday that they are willing to expand a $24 billion currency swap program to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments.
By lending to countries shut out of overseas capital markets, Chinese President Xi Jinping is bolstering the country’s influence in the global economy and cutting into the International Monetary Fund’s status as the go-to financier for nations in financial distress. While the IMF tends to demand reforms aimed at stabilizing a country’s finances in exchange for loans, analysts speculate that China’s terms are more focused on securing its interests in the resource-rich countries.