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The debt trap narrative just a concocted lie

The debt trap narrative just a concocted lie

Fonte: Globaltimes.cn Western society is filled with great platitudes, clichés and catchphrases about the Communist Party of China (CPC). Western p

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Fonte: Globaltimes.cn

Western society is filled with great platitudes, clichés and catchphrases about the Communist Party of China (CPC). Western politicians’ biggest commonplace about the CPC is that it is not democratic. By saying this, they obviously assume that their own form of democracy is the only “real” one. They fail to acknowledge the fact that their own democracy has been imposed on people through the use of bombs, particularly on those they arrogantly consider ignorant or backward.

For a long time, the image of the CPC in the West has been demonized by the media and politicians. We must consider the reasons why these Western factions continuously and sustainably engage in smear campaigns against the CPC. The smear campaigns against China are actually led by the US, and the NATO countries and their governments can do nothing else but obey the White House through media, social networks, press and TV stations.

The opinion of the people in these states is very different. Upon closer inspection, in the aftermath of the USSR collapse – when China had not yet emerged as it has today – China was not frightening. However, after 30 years, things have changed considerably, and the CPC and the country that it represents have been viewed as public enemy No.1.

Let us not forget China’s privileged relationship with developing countries, an issue that greatly annoys the US and the former colonizing countries. While providing aid and assistance to foreign states, China always respects the sovereignty of recipient countries, with no strings attached, and pursues results with a win-win approach. Chinese aid and assistance have brought real benefits to developing countries and have received their appreciation.

The so-called Chinese debt trap is a narrative that the US and some other Western countries adopted to defame and slander China, as well as disrupt its cooperation with other developing countries. As pointed out in an article published in The Atlantic magazine on February 6, 2021, “The Chinese ‘Debt Trap’ Is a Myth,” the debt trap narrative wrongfully portrays both Beijing and the developing countries it deals with.

Western capital is the largest creditor of developing countries. According to the World Bank’s 2022 statistics on international debt, 28.8 percent of Africa’s outstanding external debt is owed to multilateral financial institutions and 41.8 percent to commercial creditors composed mainly of Western financial institutions. These two types of institutions together hold nearly three-quarters of the debt, thus making them the largest creditors of African debt.

In 2021, according to the director of the China Africa Research Initiative (CARI) at John Hopkins University in Baltimore, Maryland, after reviewing thousands of Chinese loan documents, mainly for projects in Africa, CARI found no evidence that China deliberately pushes poor countries into debt as a way to seize their assets or gain a greater say in their internal affairs. CARI data shows that China holds 17 percent of Africa’s total external debt, far less than the West.

The debt issue is, in essence, a development issue. The key to solving this problem lies in ensuring that loans provide real benefits. Let us take Africa as an example. Western countries’ financing for Africa is mainly concentrated in non-productive sectors, and most lending is tied to political constraints, such as human rights and judicial reform. Western countries have failed to truly promote economic development. Instead, they have served as tools to control and cause harm to Africa.

China always respects the will of African peoples and keeps their states’ real needs in mind. Chinese investment and funding for Africa are mainly focused on infrastructure construction and manufacturing-related sectors. As we enter the 21st century, China has been proactively working to support Africa’s economic development and has provided an alternative to the traditional financing channels of the Paris Club – an informal group of financial organizations of the world’s 22 richest countries, which proceeds with a so-called renegotiation of the bilateral public debt of countries in the Global South.

Debtors are often recommended by the International Monetary Fund after other solutions have failed. China, however, has helped Africa strengthen its capacity for self-generated and self-sufficient development and usher in a golden age of high-speed economic growth for two consecutive decades. A further study by RAND Corporation – a US think tank, whose name comes from the contraction of Research and Development – points out that, in that particular region of the New Silk Road, having a rail link between trading partners has improved total exports by 2.8 percent.

China attaches great importance to the debt sustainability of projects. In 2017 it signed the Guiding Principles on Development Financing with 26 countries participating in the Silk Road. In 2019 China released the debt sustainability framework for countries participating in the Silk Road. Based on the debt situation and repayment capacity of debtor countries, and following the principles of equal consultation, compliance with laws and regulations, openness and transparency, the framework aims to strengthen monitoring and evaluation of the economic, social and livelihood benefits of the projects. It also channels sovereign loans into high-yield areas with a view to securing long-term project returns.

China has also made proactive efforts to reduce the burden on debtor countries. According to the World Bank, between 2008 and 2021, China provided 71 debt restructurings for low-income countries. In 2020 it proactively responded to the Debt Service Suspension Initiative (DSSI) of the G20 Group – a forum of leaders, finance ministers and central bank governors created in 1999 – by suspending the payment of more than $1.3 billion in debt that year alone, i.e. nearly 30 percent of the G20 total amount, making it the largest contributor among G20 members. China signed debt suspension agreements or reached mutual understanding on debt suspension with 19 African countries and proactively participated in case-based debt resolution for Chad and Ethiopia under the G20 Common Framework.

The US and some other Western countries, rather than taking action, point an accusing finger at China for having provided aid and assistance. This has caused displeasure among developing countries.