China yesterday launched a staunch defense of its Belt and Road Initiative as it opened a summit with a pledge to ease concerns about debt linked to its signature foreign policy.
Chinese President Xi Jinping’s (習近平) pet project is a reboot of the ancient Silk Road to connect Asia to Europe and Africa through massive investments in maritime, road and rail projects.
The initiative offers to bring much-needed modern infrastructure to developing nations, but the US has dubbed it a “vanity project” and critics warn it is a “debt trap” favoring Chinese companies.
Photo: AFP
Huang Kunming (黃坤明), a member of the Politburo of the Chinese Communist Party, said at the opening of the three-day Belt and Road Forum in Beijing that there have been “some misunderstandings and unfounded rumors” about the initiative that China hopes to clear up, but in a nod to the concerns over loans, Chinese Minister of Finance Liu Kun (劉昆) said Beijing would release a framework to “prevent debt risks,” the China Securities Journal reported.
The “debt sustainability analysis framework” encourages Chinese financial institutions and other nations to voluntarily improve debt management levels, the report said.
China must properly address “issues of environmental protection and debt management that the international community pays close attention to,” China Development Bank governor Zheng Zhijie (鄭之杰) said.
The state bank has doled out much of the Belt and Road-related loans since 2013, with Zheng saying it had extended US$190 billion in financing to 600 projects.
IMF managing director Christine Lagarde said that Liu’s announcement and China’s increased focus on the long-term success of Belt and Road projects were “very welcome steps in the right direction.”
Lagarde told the forum that “sound financial regulation, transparent rules for investment and attention to fiscal sustainability” were needed to successfully open capital markets, her prepared remarks said.
Leaders from 37 nations began to arrive in Beijing for the forum, with officials from scores of other nations in attendance.
Russian President Vladimir Putin and Italian Prime Minister Giuseppe Conte, whose nation became the first G7 member to sign up to Belt and Road, are among the headliners, but EU powers Germany and France are sending ministers instead, while the US has not dispatched any officials from Washington.
“We call upon all countries to ensure that their economic diplomacy initiatives adhere to internationally accepted norms and standards, promote sustainable, inclusive development, and advance good governance and strong economic institutions,” a US embassy spokesperson said in Beijing.
Since Xi launched the initiative in 2013, China has invested US$90 billion in projects, while banks have provided between US$200 billion and US$300 billion in loans, Chinese officials said.
However, examples of debt trouble abound.
Sri Lanka turned over a deep-sea port to China for 99 years after it was unable to repay loans. Pakistan needs an international bailout and Montenegro has had to make difficult choices after taking on crushing debt to pay a Chinese company to build a new highway.
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