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Beijing on Wednesday rejected recent claims by a Washington-based think-tank that loans offered under China’s Belt and Road Initiative (BRI) will elevate debt risks in several countries including Pakistan, Djibouti and Montenegro.
Defending the BRI as a project aimed at “promoting connectivity, advance international cooperation and achieving common development of all relevant nations”, China’s Foreign Ministry asserted that participant countries understand their own interests and development needs.
"Since the Belt and Road Initiative was put forth five years ago, it has been echoed and supported by more than 100 countries and international organizations; it has become the largest global cooperation platform and the most popular international public goods,” Foreign Ministry Spokesperson Geng Shuang's told media persons on Wednesday.
“How could it gain such great popularity and achieve such great progress if there were as high risks as some say? The participating countries have the biggest say on whether the initiative and those projects are good or not," he added.
The Chinese response came after a new study by Washington-based Center for Global Development (CGD) claimed 23 of the 68 potential borrower countries under the BRI were already at a “quite high” risk of debt distress; while eight out of those 23 countries would face difficulties in servicing their debt because of future financing related to BRI projects. These eight countries are Pakistan, Djibouti, Laos, Maldives, Mongolia, Montenegro, Tajikistan and Kyrgyzstan.
“The primary concern is that an eight-trillion-US-dollar initiative will leave countries with debt 'overhangs' that will impede sound public investment and economic growth more generally. There is also concern that debt problems will create an unfavorable degree of dependency on China as a creditor,” the CGD report titled “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective” said.
“The big takeway” according to the study is that “BRI is unlikely to cause a systematic debt problem, yet the initiative will likely run into instances of debt problems among select participating countries – requiring better standards and improved debt practices from China.”
The report recommended “multilateralization” of BRI loans on the lines of World Bank and Asian Development Bank. It also proposed “additional mechanisms to agree to lending standards” to mitigate risks of default.
The Chinese foreign ministry spokesperson asserted that multilateralism is inherent to BRI. "The Belt and Road Initiative follows the principles of wide consultation, joint contribution and shared benefits, helping these countries bolster areas of weakness and overcome bottlenecks, as well as creating new opportunities and possibilities to improve the wellbeing of their people and develop their economy,” Geng said.
“This is a major reason that the Belt and Road Initiative has been widely welcomed by a large number of developing countries," he added.
Geng also stressed that China “follows market principles and common international practices” while attaching great importance to “debt sustainability” when it comes to BRI projects.
The CGD report on debt risks under BRI came amid growing US noise over Chinese loans to developing countries, including in Africa. The US Secretary of State Rex Tillerson warned on Tuesday that China’s approach to development in Africa “encourages dependency” that weakens the sovereignty of the nations.
Dismissing the US warnings, Geng reiterated Beijing’s position that Chinese financial support to African nations is helping those countries achieve peace and development.
“Supporting Africa in realizing peace, stability and development serves the common interests and is also the shared responsibility of the international community. China welcomes the diversification of Africa's international partnerships and sincerely hopes that various parties of the international community can increase inputs in Africa,” he said.
“In particular, the developed countries should earnestly deliver on their commitment. Relevant countries should develop relations with Africa with a view to supporting Africa's peace and development and making positive contributions to its prosperity and revitalization, instead of making irresponsible remarks on African countries' efforts to pursue their own development and their ongoing cooperation with other countries,” he added in response to Tillerson’s criticism.
The Chinese Foreign Ministry also announced on Wednesday that the Summit of the Forum on China-Africa Cooperation (FOCAC) will be held in Beijing this September.
“At the moment, China and Africa are in close communication and coordination and making all-out efforts to prepare for the summit. We believe that the summit will surely achieve fruitful outcomes and inject strong impetus into the development of Africa and the China-Africa cooperation,” Geng said.
(CGTN)
