China faces fears about Belt and Road debt fears ahead of con­struc­tion fo­rum

The News-Times - - BUSINESS -

China’s fi­nance min­is­ter tried Thurs­day to dis­pel com­plaints its Belt and Road in­fras­truc­ture­build­ing ini­tia­tive leaves de­vel­op­ing coun­tries with too much debt, promis­ing “sus­tain­able fi­nanc­ing” as lead­ers gath­ered to cel­e­brate the project.

Liu Kun’s com­ments came as Chi­nese au­thor­i­ties blan­keted the cap­i­tal with se­cu­rity for the fo­rum celebratin­g Pres­i­dent Xi Jin­ping’s sig­na­ture for­eign ini­tia­tive.

De­vel­op­ing na­tions have wel­comed the ini­tia­tive to in­crease trade by build­ing ports and other fa­cil­i­ties in a re­gion the Asian Devel­op­ment Bank says needs $26 trillion of in­vest­ment by 2030 to keep economies grow­ing. But coun­tries in­clud­ing Malaysia and Thai­land have can­celed or scaled back projects due to high costs, while some oth­ers are strug­gling to re­pay Chi­nese loans.

Bei­jing will pur­sue “sta­ble and sus­tain­able fi­nanc­ing,” said the fi­nance min­is­ter, Liu Kun, at an event held ahead of Fri­day’s start of the sec­ond Belt and Road Fo­rum.

Chi­nese reg­u­la­tors will work with banks and multi­na­tional in­sti­tu­tions to “build a high-qual­ity, high-stan­dard, sus­tain­able fi­nanc­ing sys­tem,” said Liu.

This week’s conference brings to­gether lead­ers or en­voys from three dozen coun­tries in­clud­ing Malaysia, In­done­sia, Ser­bia, Myan­mar and Kenya.

Po­lice and para­mil­i­tary troops pa­trolled Bei­jing streets and sub­way sta­tions. Ma­jor traf­fic ar­ter­ies in the city of 22 mil­lion peo­ple are due to be closed for of­fi­cial mo­tor­cades.

Asian and African lead­ers are ex­pected to press Bei­jing to re­duce fi­nanc­ing costs for Belt and Road projects. That might in­ject a note of ten­sion into one of China’s high­est-pro­file po­lit­i­cal events this year.

Most Belt and Road projects are built by Chi­nese state-owned com­pa­nies and are paid for with loans from gov­ern­ment banks at com­mer­cial in­ter­est rates.

Chi­nese lenders have pro­vided $440 bil­lion in fi­nanc­ing, ac­cord­ing to the coun­try’s cen­tral bank gov­er­nor, Yi Gang, who spoke at the event with Liu. He gave no de­tails of how much has been re­paid or how much is deemed to be at risk of pos­si­ble de­fault.

In ad­di­tion, some $75 bil­lion has been raised in Chi­nese bond mar­kets, ac­cord­ing to Yi, who spoke at the event with Liu.

On Wed­nes­day, Ethiopia an­nounced Bei­jing had for­given in­ter­est owed through the end of 2018 on Belt and Road loans to the north­east African coun­try.

Devel­op­ment experts have ex­pressed con­cern Chi­nese-led projects might cause en­vi­ron­men­tal harm or al­low corruption.

But Xi’s ini­tia­tive is grad­u­ally win­ning wider sup­port de­spite wor­ries in the United States, Rus­sia, Ja­pan and In­dia that China is try­ing to ex­pand its strate­gic in­flu­ence at their ex­pense.

In March, Italy be­came the first mem­ber of the Group of Seven ma­jor economies, which in­cludes the United States, to sign an agree­ment to sup­port Belt and Road.

Chi­nese of­fi­cials say they are ex­am­in­ing bor­row­ers more care­fully to en­sure they can re­pay loans.

Pos­si­bly due to that, the num­ber of new Belt and Road projects has plunged.

The to­tal value of new con­tracts fell 42 per­cent in the first half of 2018 com­pared with a year ear­lier, ac­cord­ing to Moody’s.

As­so­ci­ated Press

A woman walks by work­ers on a plat­form put fin­ish­ing touch on a flow­ers dec­o­ra­tion in a shape of a train and a con­tainer ves­sel for pro­mot­ing the up­com­ing Belt and Road Fo­rum in Bei­jing on Tues­day.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.