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Banker: China is a responsible partner of B&R countries in financial cooperation

May 28, 2020


Abstract : China is a responsible partner of countries along the Belt and Road in financing cooperation and is willing to assist the countries with low income in dealing with debt problems amid the COVID-19 pandemic, said a senior official of China's central bank.

BEIJING, May 28 (Xinhua) -- China is a responsible partner of countries along the Belt and Road in financing cooperation and is willing to assist the countries with low income in dealing with debt problems amid the COVID-19 pandemic, said a senior official of China's central bank.

"The construction of the Belt and Road did not increase the debt burden of relevant countries," said Chen Yulu, deputy governor of the People's Bank of China (PBOC).

"Therefore, accusing the Belt and Road Initiative of creating 'debt trap' for some countries is at variance with the facts," Chen said in an exclusive interview with Shanghai Securities News.

As a matter of fact, all kinds of economies across the globe saw debt growth in recent years, Chen argued.

Statistics from the Institute of International Finance show that the world's total amount of debts reached 225 trillion U.S. dollars in 2019, 322 percent of the world's GDP, and more importantly, developed countries saw fast debt growth.

In addition, an analysis from the China-Africa Research Initiative at Johns Hopkins University's School of Advanced International Studies pointed out that Africa's debt borrowed from China was not particularly large. China's new lending to Africa fell sharply after 2013, to about 12 billion U.S. dollars in 2014 and 11 billion U.S. dollars in 2015, and although the figure rebounded to some 15 billion U.S. dollars in 2017, it was still below the level in 2013.

Chen stressed that China never imposed political terms on the loans to countries along the Belt and Road.

In the past seven years of jointly building the Belt and Road, Chinese financial institutions have cooperated with international commercial institutions and multilateral development institutions in providing funds to countries with low income and in urgent need of financing supports, he added.

"The PBOC, in cooperation with various parties, has provided strong support for Belt and Road construction through initiating or taking part in the establishment of the Silk Road Fund and several other equity funds," according to Chen.

In April 2018, China and the International Monetary Fund launched the China-IMF Capacity Development Center, aiming to organize training programs including debt sustainability for countries with low income.

At the Forum on China-Africa Cooperation in 2015 and 2018 respectively, China announced exemption of the unpaid inter-government interest-free loans due to the end of 2015 and 2018 for the least developed countries that have established diplomatic relations with China.

The vice central bank governor said the COVID-19 pandemic has greatly impacted all parties including countries with low income and China will actively help the countries deal with the problem of debt vulnerability and overcome difficulties during the pandemic.

"Together with multilateral and commercial lenders, China is willing to do as much as possible to support low-income countries in the combat against COVID-19," Chen said.

When asked about whether China would continue to support financial integration of the Belt and Road, which is one of the five main parts of the initiative, Chen said financing is the largest challenge faced by low-income countries along the Belt and Road and the key to it is to find projects with potential to achieve fair investment returns.

In fact, countries with low income experienced relatively faster growth in the decade after the global financial crisis, and the amount of their debt increased accordingly with their economic growth and amount of asset.

In the future, China will work with the international community to expand financing channels for these countries under the framework of the Belt and Road Initiative, to meet their reasonable demands for financing and realize the development goals for 2030, Chen said.

(Edited by Yang Qi with Xinhua Silk Road, kateqiyang@xinhua.org)

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Keyword: B&R financial cooperation B&R Weekly

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