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Asia China's Xi touts more than US$64 billion in Belt and Road deals
Chinese President Xi Jinping raises his glass and proposes a toast at the end of his speech during the welcome banquet at the Great Hall of the People in Beijing, China on Apr 26, 2019. (Photo: Nicolas Asfour/Pool via Reuters)
27 Apr 2019 07:32PM (Updated: 27 Apr 2019 10:13PM)
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BEIJING: President Xi Jinping on Saturday (Apr 27) hailed deals worth more than US$64 billion signed during China's Belt and Road Initiative (BRI) this week as he sought to reassure sceptics the project will deliver sustainable growth for all involved.
Xi said market principles will apply in all Belt and Road cooperation projects and that his signature initiative to recreate the old Silk Road joining China with Asia and Europe will deliver green and high-quality development.
"More and more friends and partners will join in Belt and Road cooperation," he said in his closing remarks. "The cooperation will enjoy higher quality and brighter prospects."
READ: Xi says to reject protectionism, open up Belt and Road
Xi and other top Chinese officials repeatedly sought to reassure partners and potential participants this week that Beijing does not intend to saddle them with high debts and wants BRI to benefit all parties involved.
A joint communique issued at the conclusion of the summit said that leaders had agreed to project financing that respects global debt goals and promotes green growth, in line with a draft seen by Reuters last week.
In a separate statement, China said it signed a memorandum of understanding with various countries including Italy, Peru, Barbados, Luxembourg, Peru and Jamaica.
"All of this shows that Belt and Road cooperation is in synch with the times, widely supported, people centred and beneficial to all," Xi said on Saturday.
READ: Belt and Road can go beyond physical infrastructure, take transparent approach in next phase: PM Lee
Data from Refinitiv shows the total value of projects in the scheme stands at US$3.67 trillion, spanning countries in Asia, Europe, Africa, Oceania and South America.
Some partner nations have complained about the high cost of projects of BRI, which was launched in 2013, while some western governments view it as a means to spread Chinese influence abroad, leaving poor countries with unsustainable debt.
China said this week it would establish a framework on debt sustainability to "prevent and resolve debt risks" as part of its efforts to allay such fears.
While most Belt and Road projects are continuing as planned, some have been caught up by changes in government in countries such as Malaysia and the Maldives.
Xi did not elaborate on the types of deals signed this week. But on Friday China’s state asset regulator said that at least 17 central government-owned firms, including companies such as China Railway Construction Corp and Mengniu Dairy, signed deals at the Belt and Road summit.
These deals totalled more than US$20 billion in value, according to Reuters calculations.
(Reporting by Ben Blanchard; additional reporting by Min Zhang; Writing by Se Young Lee; Editing by Joseph Radford, Alexander Smith and Clelia Oziel)
Source: Reuters/ad
Tagged Topics
https://www.nytimes.com/2019/04/26/opinion/china-belt-road-initiative.html
Opinion
Is China the World’s Loan Shark?
Some say Beijing lends money for infrastructure and development to pressure poor countries with debt. Not so.
By Deborah Brautigam
Ms. Brautigam is an expert on China-Africa relations at Johns Hopkins University.
CreditGolden Cosmos
Image
CreditCreditGolden Cosmos
WASHINGTON — Representatives from more than 150 countries began to gather in Beijing on Friday for a grand forum to celebrate China’s grand Belt and Road Initiative. Since its formal unveiling in 2013, B.R.I. — a vast, worldwide web of infrastructure-development projects mostly funded or sponsored by the Chinese government — has generated both tremendous enthusiasm and tremendous anxiety.
Some call the colossal program a new Marshall Plan, arguing that it could radically reduce the costs of international trade as well as underpin the economic transformation of poor countries.
Others accuse China of using B.R.I. as a way to flex its economic muscle for political gain on the sly. The whole effort is a cover for “debt-trap diplomacy,” goes one common criticism — or, to borrow from John R. Bolton, the United States national security adviser, China is making “strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands.” (Some American Democrats seem to agree with him, at least about this.)
Yes, debt is on the rise in the developing world, and Chinese overseas lending is, for the first time, a part of the story. But a number of us academics who have studied China’s practices in detail have found scant evidence of a pattern indicating that Chinese banks, acting at the government’s behest, are deliberately over-lending or funding loss-making projects to secure strategic advantages for China.
The main example of these purported ploys is the Hambantota Port in southern Sri Lanka: The government handed control over the port to a Chinese company in 2017 after struggling to make its loan payments to China. But that’s a special case, and it is widely misunderstood.
China does not publish details about its overseas lending, but the China-Africa Research Initiative at Johns Hopkins University (which I direct) has collected information on more than 1,000 Chinese loans in Africa between 2000 and 2017, totaling more than $143 billion. Boston University’s Global Development Policy Center has identified and tracked more than $140 billion in Chinese loans to Latin America and the Caribbean since 2005.
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Based on the findings of both institutes, it seems that the risks of B.R.I. are often overstated or mischaracterized.
Take Africa. The International Monetary Fund estimates that as of late January some 17 low-income African countries already were in, or were at risk of, “debt distress,” or of experiencing difficulties in servicing their public debt. We at the China Africa Research Initiative created debt profiles for those countries based on our data on Chinese loans as well as statistics from the World Bank and the I.M.F. — and we discovered that a crowd of global banks and bondholders were involved: notably, in Mozambique, Credit Suisse; or in Chad, the Anglo-Swiss mining giant Glencore. In some of the 17 countries the I.M.F. identified as vulnerable, including Cameroon and Ethiopia, China was the single-largest creditor, but non-Chinese lenders still held the majority of the debt. Only in Djibouti, the Republic of Congo and Zambia did Chinese loans account for half or more of the country’s public debt.
In its 2019 study on China in Latin America and the Caribbean, the Global Development Policy Center concluded that, aside from “the important possible exception of Venezuela,” financing from China alone did not appear to be driving borrowers above the I.M.F’s debt-sustainability thresholds.
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In most of Africa and Latin America, in other words, China’s lending is significant, but fears that the Chinese government is deliberately preying on countries in need are unfounded.
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Sri Lanka is often cited as the poster child for the ills of Chinese debt-trap diplomacy. China financed a port in Hambantota; the port incurred losses, making loan-repayment difficult; after the election of a new government in Sri Lanka, 70 percent of the port was sold to a Chinese company, prompting speculation that China had orchestrated the whole fiasco.
Yet the plan to build a port in Hambantota had long been part of Sri Lanka’s broader hopes to compete with Singapore as a regional transport hub. According to a 2006 feasibility study by the Danish company Ramboll, Hambantota would be economically viable in time if it focused on becoming an intermediate stop for the shipment of vehicles and on supplying fuel to ships plying the Indian Ocean. Whereas the transshipment business developed in line with predictions, domestic political infighting stymied the rollout of fuel bunkering. The port struggled for revenues and then so did the port authority to pay back its loans.
But the Hambantota loans accounted for only a tiny share of Sri Lanka’s debt overall. When the sale of the port was negotiated in 2016, Sri Lanka had an external debt of $46.5 billion; according to the I.M.F., only 10 percent of it was owed to China. As the economists Dushni Weerakoon and Sisira Jayasuriya have argued, “Sri Lanka’s debt problem isn’t made in China.”
And B.R.I. can be risky for China, too. Consider China’s largest overseas loan recipient, Venezuela, to which it has lent some $67 billion since 2007. The Chinese government was expecting to be repaid in oil exports. But the global price of oil fell sharply between 2014 and 2016. As Venezuela descended into political chaos, oil production collapsed. For the past few years, the government has paid only interest on its Chinese loans. Matt Ferchen, of the Carnegie-Tsinghua Center for Global Policy, has argued there is no evidence that Venezuela’s difficulties, including over its repayments, have served China’s geostrategic interests.
There certainly are problems with China’s approach to overseas lending. For one thing, Chinese banks still rely too heavily on Chinese construction companies to find and develop B.R.I. projects. Deals are often struck without any open tenders, creating opportunities for cronyism and kickbacks, and lending credence to accusations that projects bankrolled by China are sometimes overpriced.
But the idea that the Chinese government is doling out debt strategically, for its benefit, isn’t supported by the facts. Many of the would-be borrowers gathering in Beijing this weekend are likely to carefully scrutinize the costs and benefits of Chinese loans; some may be poor, but that doesn’t make them unaware or unsavvy. China’s B.R.I. isn’t debt-trap diplomacy: It’s just globalization with Chinese characteristics.
Deborah Brautigam is the Bernard L. Schwartz Professor of International Political Economy at the Paul H. Nitze School of Advanced International Studies, at Johns Hopkins University.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.
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As technology advances, will it continue to blur the lines between public and private? Explore what's at stake and what you can do about it.
A version of this article appears in print on April 27, 2019, on Page A23 of the New York edition with the headline: Is China the World’s Loan Shark?. Order Reprints | Today’s Paper | Subscribe
Asia China's Xi touts more than US$64 billion in Belt and Road deals
Chinese President Xi Jinping raises his glass and proposes a toast at the end of his speech during the welcome banquet at the Great Hall of the People in Beijing, China on Apr 26, 2019. (Photo: Nicolas Asfour/Pool via Reuters)
27 Apr 2019 07:32PM (Updated: 27 Apr 2019 10:13PM)
Share this content
Bookmark
BEIJING: President Xi Jinping on Saturday (Apr 27) hailed deals worth more than US$64 billion signed during China's Belt and Road Initiative (BRI) this week as he sought to reassure sceptics the project will deliver sustainable growth for all involved.
Xi said market principles will apply in all Belt and Road cooperation projects and that his signature initiative to recreate the old Silk Road joining China with Asia and Europe will deliver green and high-quality development.
"More and more friends and partners will join in Belt and Road cooperation," he said in his closing remarks. "The cooperation will enjoy higher quality and brighter prospects."
READ: Xi says to reject protectionism, open up Belt and Road
Xi and other top Chinese officials repeatedly sought to reassure partners and potential participants this week that Beijing does not intend to saddle them with high debts and wants BRI to benefit all parties involved.
A joint communique issued at the conclusion of the summit said that leaders had agreed to project financing that respects global debt goals and promotes green growth, in line with a draft seen by Reuters last week.
In a separate statement, China said it signed a memorandum of understanding with various countries including Italy, Peru, Barbados, Luxembourg, Peru and Jamaica.
"All of this shows that Belt and Road cooperation is in synch with the times, widely supported, people centred and beneficial to all," Xi said on Saturday.
READ: Belt and Road can go beyond physical infrastructure, take transparent approach in next phase: PM Lee
Data from Refinitiv shows the total value of projects in the scheme stands at US$3.67 trillion, spanning countries in Asia, Europe, Africa, Oceania and South America.
Some partner nations have complained about the high cost of projects of BRI, which was launched in 2013, while some western governments view it as a means to spread Chinese influence abroad, leaving poor countries with unsustainable debt.
China said this week it would establish a framework on debt sustainability to "prevent and resolve debt risks" as part of its efforts to allay such fears.
While most Belt and Road projects are continuing as planned, some have been caught up by changes in government in countries such as Malaysia and the Maldives.
Xi did not elaborate on the types of deals signed this week. But on Friday China’s state asset regulator said that at least 17 central government-owned firms, including companies such as China Railway Construction Corp and Mengniu Dairy, signed deals at the Belt and Road summit.
These deals totalled more than US$20 billion in value, according to Reuters calculations.
(Reporting by Ben Blanchard; additional reporting by Min Zhang; Writing by Se Young Lee; Editing by Joseph Radford, Alexander Smith and Clelia Oziel)
Source: Reuters/ad
Tagged Topics
https://www.nytimes.com/2019/04/26/opinion/china-belt-road-initiative.html
Opinion
Is China the World’s Loan Shark?
Some say Beijing lends money for infrastructure and development to pressure poor countries with debt. Not so.
By Deborah Brautigam
Ms. Brautigam is an expert on China-Africa relations at Johns Hopkins University.
- April 26, 2019
CreditGolden Cosmos
Image
CreditCreditGolden Cosmos
WASHINGTON — Representatives from more than 150 countries began to gather in Beijing on Friday for a grand forum to celebrate China’s grand Belt and Road Initiative. Since its formal unveiling in 2013, B.R.I. — a vast, worldwide web of infrastructure-development projects mostly funded or sponsored by the Chinese government — has generated both tremendous enthusiasm and tremendous anxiety.
Some call the colossal program a new Marshall Plan, arguing that it could radically reduce the costs of international trade as well as underpin the economic transformation of poor countries.
Others accuse China of using B.R.I. as a way to flex its economic muscle for political gain on the sly. The whole effort is a cover for “debt-trap diplomacy,” goes one common criticism — or, to borrow from John R. Bolton, the United States national security adviser, China is making “strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands.” (Some American Democrats seem to agree with him, at least about this.)
Yes, debt is on the rise in the developing world, and Chinese overseas lending is, for the first time, a part of the story. But a number of us academics who have studied China’s practices in detail have found scant evidence of a pattern indicating that Chinese banks, acting at the government’s behest, are deliberately over-lending or funding loss-making projects to secure strategic advantages for China.
The main example of these purported ploys is the Hambantota Port in southern Sri Lanka: The government handed control over the port to a Chinese company in 2017 after struggling to make its loan payments to China. But that’s a special case, and it is widely misunderstood.
China does not publish details about its overseas lending, but the China-Africa Research Initiative at Johns Hopkins University (which I direct) has collected information on more than 1,000 Chinese loans in Africa between 2000 and 2017, totaling more than $143 billion. Boston University’s Global Development Policy Center has identified and tracked more than $140 billion in Chinese loans to Latin America and the Caribbean since 2005.
You have 4 free articles remaining.
Subscribe to The Times
Based on the findings of both institutes, it seems that the risks of B.R.I. are often overstated or mischaracterized.
Take Africa. The International Monetary Fund estimates that as of late January some 17 low-income African countries already were in, or were at risk of, “debt distress,” or of experiencing difficulties in servicing their public debt. We at the China Africa Research Initiative created debt profiles for those countries based on our data on Chinese loans as well as statistics from the World Bank and the I.M.F. — and we discovered that a crowd of global banks and bondholders were involved: notably, in Mozambique, Credit Suisse; or in Chad, the Anglo-Swiss mining giant Glencore. In some of the 17 countries the I.M.F. identified as vulnerable, including Cameroon and Ethiopia, China was the single-largest creditor, but non-Chinese lenders still held the majority of the debt. Only in Djibouti, the Republic of Congo and Zambia did Chinese loans account for half or more of the country’s public debt.
In its 2019 study on China in Latin America and the Caribbean, the Global Development Policy Center concluded that, aside from “the important possible exception of Venezuela,” financing from China alone did not appear to be driving borrowers above the I.M.F’s debt-sustainability thresholds.
Editors’ Picks
Does This Dress Make Me Look Guilty?
How Gay Are You?
The Racial Bias Built Into Photography
In most of Africa and Latin America, in other words, China’s lending is significant, but fears that the Chinese government is deliberately preying on countries in need are unfounded.
Related
More on China’s Belt and Road Initiative
China Retools Vast Global Building Push Criticized as Bloated and Predatory
April 25, 2019
Opinion | Ilaria Maria Sala
Did Xi Jinping Conquer Italy or Just Buy a Lot of Blood Oranges?
March 26, 2019
Opinion | James A. Millward
Is China a Colonial Power?
May 4, 2018
Sri Lanka is often cited as the poster child for the ills of Chinese debt-trap diplomacy. China financed a port in Hambantota; the port incurred losses, making loan-repayment difficult; after the election of a new government in Sri Lanka, 70 percent of the port was sold to a Chinese company, prompting speculation that China had orchestrated the whole fiasco.
Yet the plan to build a port in Hambantota had long been part of Sri Lanka’s broader hopes to compete with Singapore as a regional transport hub. According to a 2006 feasibility study by the Danish company Ramboll, Hambantota would be economically viable in time if it focused on becoming an intermediate stop for the shipment of vehicles and on supplying fuel to ships plying the Indian Ocean. Whereas the transshipment business developed in line with predictions, domestic political infighting stymied the rollout of fuel bunkering. The port struggled for revenues and then so did the port authority to pay back its loans.
But the Hambantota loans accounted for only a tiny share of Sri Lanka’s debt overall. When the sale of the port was negotiated in 2016, Sri Lanka had an external debt of $46.5 billion; according to the I.M.F., only 10 percent of it was owed to China. As the economists Dushni Weerakoon and Sisira Jayasuriya have argued, “Sri Lanka’s debt problem isn’t made in China.”
And B.R.I. can be risky for China, too. Consider China’s largest overseas loan recipient, Venezuela, to which it has lent some $67 billion since 2007. The Chinese government was expecting to be repaid in oil exports. But the global price of oil fell sharply between 2014 and 2016. As Venezuela descended into political chaos, oil production collapsed. For the past few years, the government has paid only interest on its Chinese loans. Matt Ferchen, of the Carnegie-Tsinghua Center for Global Policy, has argued there is no evidence that Venezuela’s difficulties, including over its repayments, have served China’s geostrategic interests.
There certainly are problems with China’s approach to overseas lending. For one thing, Chinese banks still rely too heavily on Chinese construction companies to find and develop B.R.I. projects. Deals are often struck without any open tenders, creating opportunities for cronyism and kickbacks, and lending credence to accusations that projects bankrolled by China are sometimes overpriced.
But the idea that the Chinese government is doling out debt strategically, for its benefit, isn’t supported by the facts. Many of the would-be borrowers gathering in Beijing this weekend are likely to carefully scrutinize the costs and benefits of Chinese loans; some may be poor, but that doesn’t make them unaware or unsavvy. China’s B.R.I. isn’t debt-trap diplomacy: It’s just globalization with Chinese characteristics.
Deborah Brautigam is the Bernard L. Schwartz Professor of International Political Economy at the Paul H. Nitze School of Advanced International Studies, at Johns Hopkins University.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.
Sign Up for The Privacy Project Newsletter
As technology advances, will it continue to blur the lines between public and private? Explore what's at stake and what you can do about it.
A version of this article appears in print on April 27, 2019, on Page A23 of the New York edition with the headline: Is China the World’s Loan Shark?. Order Reprints | Today’s Paper | Subscribe
