China defends Belt and Road but vows to battle debt

Published April 25, 2019, 7:02 PM

by Ellalyn De Vera & Richa Noriega

By Agence France-Presse

BEIJING – China launched on Thursday a staunch defense of its Belt and Road global infrastructure project as it opened a summit with a pledge to ease concerns about debt linked to its signature foreign policy.

President Xi Jinping’s 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 countries, but the United States has dubbed it a “vanity project” and critics warn it is a “debt trap” favoring Chinese companies.

Huang Kunming, a member of China’s powerful Politburo, said at the opening of the three-day Belt and Road Forum in Beijing that there have been ”some misunderstandings and unfounded rumors” about BRI that they hope to clear up.

But in a nod to the concerns over loans, Finance Minister Liu Kun said China would release a framework to ”prevent debt risks,” according to state-owned China Securities Journal.

The ”debt sustainability analysis framework” encourages Chinese finan­cial institutions and BRI countries 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,” said Zheng Zhijie, governor of the China Development Bank.

The state policy bank has doled out much of the Belt and Road-related loans since 2013, with Zheng saying it had extended $190 billion in financing to 600 projects.

International Monetary Fund (IMF) chief Christine Lagarde said Liu’s announcement and China’s increased focus on the long-term suc­cess of BRI 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, according to her prepared remarks.

Leaders from 37 countries have begun to arrive in Beijing for the three-day forum, with officials from scores of other nations in atten­dance.

Russian President Vladimir Putin and Italian Prime Minister Giuseppe Conte, whose country 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 United States 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.

Since Xi launched Belt and Road in 2013, China has invested $90 billion in projects while banks have provided between $200 billion and $300 billion in loans, according to Chinese of­ficials.

But 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 Chinese debt to pay a Chinese company to build a new highway.