US State Department publishes report aimed at defaming BRI
The debts of China’s partner countries in the Belt and Road Initiative (BRI) have become a major topic in the American media in recent days. A recent study by the US Department of State points to the existence of a bubble of 385 billion dollars in unreported debt of poor countries to Chinese banks. Despite the veracity of the information, the data collection methods used by the Department remain uncertain, and Washington is politicizing the case to carry out anti-Chinese propaganda.
Recently, a research group affiliated with the US Department of State completed a study on the debts of emerging countries to China. Among the main “discoveries” of the group is the supposed existence of a debt bubble of hundreds of billions of dollars contracted by these nations with Chinese banks. The debts would be associated with infrastructure investment projects within the framework of BRI.
Analyzing the recent history of debts involving China, the document points out that before BRI started in 2013, most of China’s loans abroad were carried out by central government financial institutions, which has profoundly changed under BRI. Now, around 70% of China’s overseas loans are being managed by state-owned companies and banks, special-purpose vehicles, joint ventures and private companies.
In an excerpt from the summary of the report, it is possible to read: “These debts are underreported to the World Bank’s Debtor Reporting System (DRS) because, in many cases, central government institutions in LMICs are not the primary borrowers responsible for repayment (…) We estimate that the average government is underreporting its current and potential repayment obligations to China by an amount that is equivalent to 5.8% of its GDP. Collectively, these underreported debts are worth approximately $385 billion”.
Commenting on the case, one of the study’s authors, Executive Director of AidData at the College of William and Mary, Brad Parks, said: “Many foreign leaders who were initially eager to jump on the BRI bandwagon are now suspending or canceling Chinese infrastructure projects because of debt sustainability concerns (…) “What we’re seeing right now with the Belt and Road Initiative is buyers’ remorse”.
In theory, the data point to a disadvantageous scenario for emerging nations that maintain a partnership with China, as they would be continuously indebted with Beijing, creating virtually endless bubbles. And, as we can see in Parks’ words, Washington certainly has an interest in manipulating this data to generate anti-Chinese propaganda and try to stop more countries from signing deals with its biggest geopolitical rival.
https://southfront.org/us-state-department-publishes-report-aimed-at-defaming-bri/