China to honor commitment to G20 Common Framework for debt disposal: PBC governor
Published: Apr 16, 2023 10:34 PM
A view of the PBC building in Beijing Photo: VCG

A view of the PBC building in Beijing Photo: VCG

China will honor its commitment to the G20 Common Framework, making joint efforts with all the stakeholders, and the country has implemented the G20 Debt Service Suspension Initiative in a responsible manner, with 45 percent of the debt service suspension from China, said Yi Gang, governor of the People's Bank of China at 47th Meeting of the International Monetary and Financial Committee.

Yi's remarks came as some Western-backed lenders, including World Bank President David Malpass, called on China to be more active in restructuring discussions for developing countries facing debt crises.

During the meeting, Yi noted that collective action and fair burden sharing are required to solve sovereign debt issues. Multilateral development banks are expected to make their contributions to debt restructuring, and private sector creditors should participate in a comparable manner.

"We will also honor our commitment to the G20 Common Framework, making joint efforts with all the stakeholders," said the governor.

China has always supported multilateral efforts to solve the debt problem, while irresponsible actions by the West such as raising interest rates exacerbate the debt problem, Song Wei, a professor at the School of International Relations and Diplomacy, Beijing Foreign Studies University, told the Global Times on Sunday.

"China is not the biggest creditor to developing countries, which is an undeniable fact. The fundamental starting point for providing loans is to promote local development, instead of profiting from them," Song added.

On the contrary, the West, taking its debt provision to Africa as an example, prematurely pushed the continent into the global capital markets through massive privatization, which has led to a hidden danger involving debt due to its limited repayment capacity, the expert said.

"In addition, the Fed's successive interest rate hikes weighed on the debt repayments of these countries, which is very irresponsible," she noted.

On April 11, Yi met with Minister of Finance of Zambia Situmbeko Musokotwane and Governor of the Bank of Zambia Denny Kalyalya, as well as Governor of the Central Bank of Sri Lanka Dr. P Nandalal Weerasinghe, during the IMF/World Bank Spring Meeting, exchanging views on issues of common concern including bilateral financial cooperation.

Song said that China has been active in communicating with relevant countries when they have debt repayment difficulties. For instance, China has provided Sri Lanka with a letter supporting the sustainability of Sri Lanka's debt, expressing its willingness to extend the debt due in 2022 and 2023.

When briefing the meeting on the economic situation in China, Yi stated that the Chinese economy is showing a steady recovery, with consumption and services rebounding strongly, while overall prices remain generally stable.

China's financial sector remains resilient, and risks are well under control. The banking sector remains generally robust, as de-risking in a small number of distressed small and medium-sized financial institutions made significant progress.

Yi stressed the significance of the timely completion of the Sixteenth General Review of Quotas by December 2023 to realize a quota share realignment that reflects the relative share of members in the global economy.

"China supports the IMF's efforts to promote the channeling of Special Drawing Rights to countries in need, hoping that relevant work will be accelerated to provide tangible support to vulnerable countries," said the governor.