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Newsline: Official slams accusations of China ‘debt trap diplomacy’

China’s overseas lending is not a “debt trap”, former central bank governor Zhou Xiaochuan has said, after two of the world’s biggest international financial institutions warned of growing credit risks in poorer countries as they struggle with the coronavirus and soaring food prices. Speaking at the Boao Forum for Asia, Zhou acknowledged that some Chinese lending might not have always been “carefully designed” and poor communication has created problems. But in general, it was not like the image portrayed by some media and countries, which amounted to a “smear” on China, he said. “Most of [the lending] is for projects that companies in debtor countries have demanded, and at the same time they have economic benefits and are beneficial to the country in the long run,” Zhou told a panel discussion on China’s Belt and Road Initiative. (https://finance.yahoo.com/news/china-debt-trap-diplomacy-ex-093000768.html) The Belt and Road Initiative, a globe-spanning infrastructure project introduced by President Xi Jinping in 2013, aims to connect Asia, Europe and Africa, while deepening economic integration and expanding China’s influence. But it has also been blamed for rising debt in low-income countries due to costly projects that have strained finances. China has often been accused of “debt trap diplomacy” – meaning entrapping countries with loans that cannot afford to repay. Following a default, China can then seize assets, according to critics.

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