China scotches suggestion it is luring countries into debt traps

19 Nov 18

No developing country will fall into a ‘debt trap’ by working with Beijing, the Chinese foreign ministry has said in response to US criticism.

This comes as US vice president Mike Pence said Chinese-backed infrastructure programmes – such as the ‘Belt and Road initiative’ – was forcing debt on poorer countries, at a meeting for Asia-Pacific trade talks in Papua New Guinea this weekend.

Pence said the US could offer a better deal for economic partnership than China. He said: “We don’t drown our partners in a sea of debt, we don’t coerce or compromise your independence.”

In response, a Chinese foreign ministry spokesperson said in a statement: “No developing country will fail into debt difficulties because of cooperation with China.

“On the contrary, cooperating with China helps these countries raise independent development capabilities and levels, and improves the lives of the local people.”

The ‘Belt and Road initiative’ is a development strategy adopted by the Chinese government involving infrastructure development and investments around the world.

In response to China’s statement, the Jubilee Debt Campaign told PF International that “no lender can ever know that debt crises will not be created from their loans”.

Tim Jones, policy officer at the organisation that campaigns for debt relief, said: “The risk of debt traps can be reduced if there is responsible lending. This includes making all loans transparent so that civil society, media and parliaments can ensure they are well used.

“However, many lenders, from China to western countries and companies, do not yet do this.”

According to analysis by the campaign group, around 20% of debt held by African governments is owed to China.

Last week, World Bank figures revealed that borrowing by low and middle-income countries more than tripled in the last year.

There has also been criticism that China’s investments and loans is an attempt to exert control over neighbouring countries in the Pacific.

But the Chinese government has denied the accusations, saying it completely understands the special difficulty Pacific island countries face”.

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