How China Will Own Russia

If Russia defaults on Chinese BRI debt, China may exercise the right to take over Russian oil and gas infrastructure.

China's belt and road loans have gone mainly to high-risk countries
From: "China faces wave of calls for debt relief on ‘Belt and Road’ projects"

Both before and after the Russian invasion of Ukraine, China publicly supported Russia's action. We understood this support to signal the People's Republic was planning to take similar action and invade Taiwan in the near future. While a Chinese invasion of Taiwan is by no means off the table, new analysis has come to light which indicates that China's support of the Russian Federation is more a matter of brass tacks. Russia is the single largest nation state recipient of Chinese Belt and Road (BRI) development loans. Therefore, if Russia defaults on Chinese BRI debt, China may exercise the right to take over Russian oil and gas infrastructure.

It is noted that in the past, when Cuba, Ethiopia and Zimbabwe defaulted on their BRI loans from China, the lender did not seize the infrastructure in question, but rather wrote off the loads.

In 2019 Zambia defaulted on its external debt, one third of which was received from China.

However, when Tajikistan needed to clear itself of BRI debt to China, did so by signing over land and mineral rights.

Sri Lanka defaulted on its sovereign debt in May 2022. In an arrangement similar to the Tajikistan case, following the default of Sri Lanka on BRI debt, a Chinese company took control of a Sri Lankan port under a 99 year lease. "In 2017, the Sri Lankan government granted China Merchants Port Holdingsa 99-year lease for the Hambantota International Port in then-President Gotabaya Rajapaksa’s home district, in exchange for money used to repay short-term government debt and shore up reserves." (Washington Post, 12 SEP 2022). Despite this infrastructure-for-cash swap, China again loaned $3 billion to Sri Lanka in 2020.

A similar arrangement may in the cards for Russia if it defaults on its roughly 55 billion dollars in BRI loans from China. Patrick Boyle estimates the cumulative Chinese lending to Russia since the year 2000 has been over 125 billion USD. However, Boyle states that Russia falls into the category of loan recipients from China where the debt is collateralised by commodity exports, in this case the loan served as a prepayment for oil a supplied through the China-Russia oil pipeline. Even when Russia defaults on other creditors, it can continue to service its loans from China through the supply of this commodity.


The seminal idea for this post came from Patrick Boyle's YouTube video titled "China's International Debt Crisis" dated 28 JUL 2022.