Communist party unlikely to forgive debt
China’s cash-strapped partners in their “Belt and Road” (BRI) global development project have been begging Beijing for debt relief amid the coronavirus pandemic, according to the Financial Times.
And according to Chinese policy advisers, the Xi regime is considering several options – including suspending interest payments on loans from the country’s financial institutions. That said, outright debt forgiveness is unlikely.
According to Washington-based consultancy RWR Advisory, Chinese financial institutions have lent an estimated $461bn for BRI projects since 2013 – making it the largest development initiative in the world.
“We understand a lot of countries are looking to renegotiate loan terms,” said one researcher at China Development Bank, which spearheads hundreds of billions of dollars in BRI projects globally along with the Export-Import Bank of China.
“But it takes time to strike a new deal and we cannot even travel abroad right now. The BRI loans are not foreign aid. We need to at least recoup principal and a moderate interest,” said the researcher on condition of anonymity.
“It is OK for 20 per cent of our portfolio projects to have problems,” they added, “But we can’t tolerate half of them going under. We might consider extending loans and giving interest relief. But in general our loans are issued according to market principles.”
The BRI, which was launched in 2013 as the signature foreign policy initiative of President Xi Jinping, is aimed at building infrastructure and boosting China’s influence around the world.
