Chinese experts refute Western lenders’ pressure on China over debt relief
Published: Apr 14, 2023 08:24 PM
debt Photo: VCG

debt Photo: VCG

Chinese experts and officials hit back at remarks from Western-backed lenders made during a meeting that China is a major creditor to emerging markets and should do more in helping debt relief.

China is willing to implement the common framework for debt disposal with other countries, China's central bank governor Yi Gang said during the World Bank and International Monetary Fund (IMF) spring meetings, according to a statement released by the People's Bank of China on Friday.

Echoing Yi's remark, Chinese Foreign Ministry spokesperson Wang Wenbin said at a press conference on Friday that China attaches great importance to the sovereign debt issue of developing countries and called for multilateral creditors, bilateral creditors and commercial creditors to participate in debt handling in accordance with joint action and fair manner.

"We hope that all parties can earnestly implement the common framework for dealing with the debt issue in an effective, systematic and comprehensive way," Wang said.

Some Western-backed lenders, including the World Bank President David Malpass however tried to push China to be more active in easing developing countries' debt problems during the IMF Spring meeting.

Malpass said China is the biggest bilateral creditor to emerging markets and needs to be open in restructuring discussions for developing countries in debt crises. 

"China needs to be willing to sign off on the structure of the restructuring," he said in an interview on Bloomberg Television Thursday.

Such remarks were refuted by Chinese experts and have already been rejected by Chinese officials a number of times.

Song Wei, professor at the School of International Relations and Diplomacy, Beijing Foreign Stud-ies University, told the Global Times that the financing from international market has been the origin and a large part of debt for some developing countries.

Data from the World Bank shows that multilateral financial institutions and commercial creditors hold more than 80 percent of the sovereign debt of 121 developing countries. According to a re-port by UK-based charity Debt Justice, African governments owe three times more debt to Western private lenders than to China, and are charged double the interest by the Western lend-ers.

China takes the debt issue of developing countries seriously and has actively contributed to alle-viating developing countries' debt burden and promoting their sustainable development, said Wang in March in response to Western lenders' call on China to be more active in restructuring discussions for some developing countries regarding debt.

"China has contributed more than anyone else to implementing the G20 Debt Service Suspension Initiative (DSSI). Besides, we have played a constructive part in the treatment of individual cases under the G20 Common Framework," Wang said.

The latest research findings at the Johns Hopkins University show that China has actively partici-pated in the G20's DSSI, and contributed 63 percent of debt service suspensions. 

In a latest move, Export-Import Bank of China has recently provided Sri Lanka with a letter sup-porting the sustainability of Sri Lanka's debt, and helped relevant parties genuinely and quickly resolved the debt issue, demonstrating China's goodwill and action in helping Sri Lanka to achieve economic sustainability.

In contrast, Western creditors claim they need to maintain their credit rating and have thus re-fused to be part of the debt relief and service suspension effort, Wang said, noting that unprece-dented massive interest rate hikes have led to tightening of financial conditions worldwide, mak-ing the severe debt problems of certain countries even worse.