0 $
2,500 $
5,000 $
2,355 $
4 DAYS LEFT UNTIL THE END OF OCTOBER

US State Department publishes report aimed at defaming BRI

Support SouthFront

US State Department publishes report aimed at defaming BRI

Illustrative Image

Document misinterprets international data on Chinese loans, creating a pro-Washington narrative.

Written by Lucas Leiroz, research fellow in international law at the Federal University of Rio de Janeiro.

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.

The report, despite demonstrating to have made a wide and quite complex study, is not very clear about the scientific methods used during the research. Collecting financial data requires a series of analysis rules that vary from case to case. The contracts for each loan have specific conditions, explained only in the clauses of each document and which, if read carefully, can completely change the opinion of the researcher who is developing the study. For example, the rate of interest that China usually imposes on its loans to poor countries tends to be decreasing, with the extinction of the debt through forgiveness in case of non-compliance. It is not clear from the report whether these conditions have been analyzed, with only one conclusion that it “is not profiting” to do business with China – which clearly indicates unnecessary politicization of the topic.

The purpose of the document seems to be simply to create the narrative that BRI is a disadvantageous initiative for emerging countries and that it will only benefit China, using debt as its main argument. This is a rather fallacious argument, however. Western and global institutions are often much more abusive than China’s banks in their contracts. The IMF itself is the greatest proof of this, considering the abusive rates of support for “sustainable” economic development that the institution adds to the high interest rates on its contracts, creating conditions that undermine the financial sovereignty of poor countries. IMF loans have recently generated unprecedented crises in African countries like Zambia, Mozambique and Tunisia – and other nations, like Sudan (whose debt to the IMF is more than 8% of its GDP), are heading in the same direction.

Not by chance, the report concludes that the most favorable situation for emerging countries is to invest in the initiatives of the Build Back Better World (B3W) program, a platform launched by the G7 to reduce the growth of Chinese global influence through the BRI. Parks stated in an interview with Reuters that “B3W is going to increase choice in the infrastructure financing market, which could lead to some high-profile BRI defections”. In other words, the document presents real data and misinterprets them to construct the narrative that it is more profitable to participate in B3W than in BRI.

However, it is unlikely that this document will have real effects on the international scenario. The countries that are joining the BRI are realizing real benefits in their economies and social indices, as China is investing globally in infrastructure projects at low and decreasing interest rates, with several cases of debt relief. Beijing does this not because of “goodness” but because BRI is a vital part of its economic project for the future. China’s medium and long-term goal is to create an economy that is more domestically oriented and less dependent on high-tech exports – thus achieving a cleaner economy – and simultaneously open to imports of technologies from emerging countries. China is investing to take advantage of it in the future and that is why it is not in the interest of the Chinese to impose abusive conditions on their contracts.

The US State Department will certainly need a better narrative to convince the world to stop cooperating with China.

MORE ON THE TOPIC:

Support SouthFront

SouthFront

Subscribe
Notify of
guest
19 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Selbstdenker

If one looks into the amount World Bank has borrowed “poor” african countries and what the conditions of these loans are, the difference is clearly seen. If these countries had a choice the would switch over to chinese loans immediately.

jens holm

Sure, but the samme would happend. Most of them are not able to pay back no matter if its dollar and yuan.

And China do try with loans too. They so far has got nothing in return from fx venezuala. The choise off course is to make no loans.

Arch Bungle

The Chinese are infinitely smarter than you and your dumb jew friends, Jens.

If they’re making loans, you can bet they’re getting benifit from it somehow…

Peter Wallace

The US will do and say anything to prevent or destroy any competition to its perceived No 1 superior position in the world. They will preach to the sheep who have no knowledge or understanding for their support to drown out any opposition. This new report just shows their abject fear of the BRI knowing that its success can cause massive damage to their power and control of the world. It must be stopped at all costs to prevent their demise and the advancement of China.

Arch Bungle

The only tool the US has to fight Chinese competition seems to propaganda.

Even intimidation of client states is no longer working.

block

Desperation, american style…

Rodney Loder.

One probable reason for rising oil/gas prices is competition from emerging economics threatening US dominance as service and aid providers, the IMF /World Bank with US veto power have for the past 60 years been giving loans to Government and Private enterprises knowing tge money would be siphened out of those recipient Countries and reinvested and spent in the US France and Britain.

This policy was designed for 2 reasons – to keep backward Countries backward and to influence their cultural development.

The homosexual Sid Loder with his Freemason jew maggots even had Obama using IMF/World Bank loans as a conditionality of gay rights, question how sick is that ?, answer it doesn’t get much slicker, All praise be only to Allah (swt).

Ahson

The CPEC project in Pakistan is a disastrous failure. This BRI/ CPEC has bankrupted Pakistan into a debt slave. Same same in Sri Lanka with its Hambantota port. China’s spent roughly $25 billion in Pakistan on CPEC, thus far, however we don’t see any result of all the infrastructure as of yet. All we see is Pakistan being ground down in the debt mill owing and as of today $125 billion to the Western financial institutions and another $90 odd billion to the Chinese in repayments. Sri Lanka’s small economy has declared austerity after facing bankruptcy. Iran having reasonable infrastructure in place is not enthused about China either. Central Asian Stans, pretty much in the same boat and refuse to accept Chinese infrastructure or monetary investment and willingly accept going into debt. Iran and Central Asia primarily interested in trading oil and gas from existing facilities, use existing roads and highways and existing pipelines and refuse to ramp up neither production nor assets. I don’t see much enthusiasm for the BRI. And interestingly enough, the West offers the world nothing else in lieu of the BRI either. Much ado bout nothing…….

Last edited 25 days ago by Ahson
Arch Bungle

All the countries on your list were third world shit holes long before China or the BRI came along.

The BRI is the only alternative they have to debt peonage at the hands of the IMF.

In signing on to the BRI they’ve chosen a much kinder creditor, one that will not bomb the crap out of them should they fail to pay their debts.

None of the countries you mentioned are smart financial operators. They’re all economically fucked anyway because they’re run by idiots.

China is not to blame here.

Ahson

I never blamed China bro……China was not goin hold that corrupt pakistan’s hand and lead them to the toilet. All it offered was construction and installation of power plants, ports, dams and highways. How much/ many of these pakistan needed was to be the responsibility of the pakistani’s to determine via feasibility studies. Obviously where 10 power plants were needed to overcome the power shortages, 20 were procured. And all this while, the majority poor steal power as is. Likewise, the existing highways and motoways are toll free, however the new 4 lane motorways are toll roads. Who goin pay toll when people got no food to eat? Look, mismanagement was not part of the deal and neither was poor planning. And fucking China ain’t their grandma. The Chinese now own a lot of assets/ infrastructure in Pakistan to try to recoup their thus far $25 billion only investment. Maybe the Chinese planned it this way all along…….they knew these busted ass countries are born slaves no? Come on no?…….lol

Last edited 25 days ago by Ahson
jens holm

Thats mainly not propaganda. We had a lot of problems here as well as in the rest of the world around 2008. Too much was spend in buildings making the prices going up making more and by that no bound in the real world loans.

Many paid for that and some relative few became as wealthy as any can get. Most people dont want those ups and down. It goes for oil and gas as well.

Arch Bungle

Wrong. It’s 100% propaganda.

RaptarDriver

Not a real country, can’t support itself, let it fall apart.

19
0
Would love your thoughts, please comment.x
()
x