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China’s Debt Cancellation is a win-win for borrowers and lenders alike. In recent years, China has cancelled billions of dollars worth of debt to struggling nations around the world. As a result, these nations are now able to use their newfound financial security to invest in their own economic and social development.

The most recent example of debt cancellation is the arrangement between China and the Democratic Republic of the Congo (DRC). In 2018, China cancelled more than 80 percent of the DRC’s debt of around $4.8 billion. This debt had been increasing since Jordan and Rwanda settled their debt with China in 2017. With this cancellation, the DRC is now able to invest in its neediest areas, including health and education. By settling its debt with China, the DRC has freed up resources to better invest in its own people.

The benefits of debt cancellation to the borrowers go beyond just financial savings. The uncertainty over high levels of debt can have a negative impact on economic stability and social development. By canceling debt, borrowers will be able to have more stability and invest in the development of their own people. This can lead to an overall improvement in the lives of citizens, resulting in economic development and poverty reduction.

In addition to the benefits of debt cancellation to the borrower, lenders also benefit as well. By cancelling debt, lenders are able to invest in more productive uses of capital. This can open up new opportunities for the lenders and can lead to larger profits.

While there are some detractors of debt cancellation, this type of action can have a profound impact on both the borrowers and the lenders. By freeing up resources for development and opening up new opportunities for investment, debt cancellation can be a win-win situation for all involved.