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US studies say BRI not a debt trap

2019-05-14 10:15:53 China Daily Global

Two studies released in the past weeks should put to rest the blind accusation that China''s infrastructure financing under the BRI has sucked developing nations into a debt trap.

Two studies released in the past weeks should put to rest the blind accusation that China's infrastructure financing under the Belt and Road Initiative has sucked developing nations into a debt trap.

Without providing any evidence, senior US officials, such as Vice-President Mike Pence, Secretary of State Mike Pompeo and National Security Advisor John Bolton, made such allegations last year.

Deborah Brautigam, a leading authority on China-Africa relations at Johns Hopkins University's School of Advanced International Studies in Washington, dismissed such accusations in an opinion piece in The New York Times on April 26.

In the column, which ran under the headline "Is China the World's Loan Shark?", Brautigam said studies "found scant evidence of a pattern indicating that Chinese banks... are deliberately overlending or funding loss-making projects to secure strategic advantages for China".

The Hambantota Port project in Sri Lanka is often cited by critics, but "that's a special case, and it is widely misunderstood," she wrote.

Brautigam's opinion piece was based on studies conducted by her China-Africa Research Initiative at the SAIS, which included information on more than 1,000 Chinese loans in Africa between 2000 and 2017, totaling more than $143 billion, as well as a study by Boston University's Global Development Policy Center, which has identified and tracked more than $140 billion in Chinese loans to Latin America and the Caribbean since 2005.

Based on the findings, Brautigam concluded that the risks of the BRI are often overstated and mischaracterized.

A report on a study by New York-based independent research provider Rhodium Group, published on April 29, also dismissed the debt-trap accusation against China.

Based on 40 cases of external debt renegotiation between 2007 and this year in 24 countries, the report said asset seizure was a rare occurrence. More often, China was inclined to renegotiate the debts or write them off, it said.

Contrary to accusations that China uses its outsized weight to gain advantage over borrowing nations, the study found that China's leverage in negotiations was limited.