China suggests change in BRI’s approach to debt problems

China has hinted at a change in how it will pursue signing
Belt and Road Initiative (BIS) amid growing concerns over the debt repayments of many partner countries due to the
coronavirus (
COVID-19[female[feminine ) pandemic.

“We will focus on quality in the joint pursuit of the BRI,” says the annual government work report presented by Chinese Premier Li Keqiang at the opening of the National People’s Congress (NPC), or parliament, on Friday. .

What is the Belt and Road Initiative and why is China pushing it hard?

Since 2019, the BRI has a dedicated subsection in the NPC report, which is China’s most important policy document. The BRI was enshrined in the Constitution of the Communist Party of China in 2017, emphasizing its special status.

The 2019 report did not mention “quality”, simply saying that China “will encourage the joint pursuit of the BRI”. He also mentioned that China would seek to advance infrastructure connectivity, which was omitted this year.

The NPC’s report is usually carefully evaluated to garner changes in direction in Chinese policy-making. This year’s report said China will focus on “achieving shared growth through consultation and collaboration” and “work with BRI partners for mutually beneficial results.”

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In recent weeks, China has faced calls from countries in Asia and Africa to delay or forgo debt repayment. Song Wei, deputy director of the Chinese Academy of International Trade and Economic Cooperation in the Ministry of Commerce, acknowledged last month that China is considering how to respond to such calls.

“What China could do to help is resuscitate loan-funded projects and make sustainable profits, instead of something as simple as offering cancellations,” he said. in an article in the Communist Party-run newspaper.
world times . “As always, China is open to discussing with debtors on the basis of equality and mutual benefit.”

Financial aid

Song noted that China’s financial assistance includes grants, interest-free loans and preferential loans. “Interest-free loans offered by the Chinese government are applicable for debt relief,” he said. “Preferential loans do not apply to debt relief and are more complex when it comes to difficult debt issues.

Simply waiving debtors’ obligations, as some countries or organizations have demanded, will not be an effective solution. If debtors find it difficult to pay on time, there may be tailor-made plans, including rescheduling or increased funding from China to help related projects resume operations and generate profits.

He suggested that the repayments could be resolved “through several financial or other approaches, such as adding subsidies by China to help revive projects, carrying out debt-for-equity swaps or hiring ‘Chinese enterprises to help operate’.

A rebranding of the Belt and Road Initiative

According to AidData, a research lab at the College of William & Mary, grants and loans from China totaled $354.4 billion between 2000 and 2014, 23% of which were grants while the rest were commercial loans to market rate or close to market.

Global debt to China increased 10-fold between 2000 and 2017, with developing countries owing China $380 billion, Germany’s Kiel Institute for the World Economy said in a report last year. .

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