China on Thursday rejected “misunderstandings” fueling concerns about its Belt and Road global infrastructure program but vowed to tame debt risks as it opened a summit on its signature foreign policy.
President Xi Jinping’s pet project is a reboot of the ancient Silk Road to connect Asia to Europe and Africa through massive investments in maritime, road and rail projects.
The Belt and Road Initiative promises to bring much-needed modern infrastructure to developing countries, but the United States has dubbed it a “vanity project” and critics warn it is a “debt trap” favoring Chinese companies.
Huang Kunming, a member of China’s powerful Politburo, said at the opening of the forum in Beijing that there have been “some misunderstandings and unfounded rumors” about BRI that they hope to clear up. But in a nod to the concerns over loans, Finance Minister Liu Kun said China would release a framework to “prevent debt risks,” according to state-owned China Securities Journal.
The “debt sustainability analysis framework” encourages Chinese financial institutions and BRI countries to voluntarily improve debt management levels, the report said.
International Monetary Fund chief Christine Lagarde said Liu’s announcement and China’s increased focus on the long-term success of BRI projects were “very welcome steps in the right direction.” Lagarde told the forum that “sound financial regulation, transparent rules for investment, and attention to fiscal sustainability” were needed to successfully open capital markets, according to her prepared remarks.
Leaders from 37 countries have begun to arrive in Beijing for the three-day forum, with officials from scores of other nations in attendance.
Russian President Vladimir Putin and Italian Prime Minister Giuseppe Conte, whose country became the first G7 member to sign up to Belt and Road, are among the headliners. But E.U. powers Germany and France are sending ministers while the United States has not dispatched any officials from Washington.
“We call upon all countries to ensure that their economic diplomacy initiatives adhere to internationally-accepted norms and standards, promote sustainable, inclusive development, and advance good governance and strong economic institutions,” a U.S. embassy spokesperson said.
Since Xi launched Belt and Road in 2013, China has invested $90 billion in projects while banks have provided between $200 billion and $300 billion in loans, according to Chinese officials. But examples of debt trouble abound.
Sri Lanka turned over a deep-sea port to China for 99-years after it was unable to repay loans. Pakistan needs an international bailout. And Montenegro has had to make difficult choices after taking on crushing Chinese debt to pay a Chinese company to build a new highway.