China responds to the US Treasury’s criticism of its lending activities
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Yesterday, March 30th, China responded to the US Treasury Secretary’s recent remarks about its lending activities, calling such statements irresponsible and unreasonable. The statement that the country addressed was actually a criticism of Beijing’s lending practices. Yellen remarked that China’s lending deal offered to develop countries is actually a debt trap.
The US Treasury Secretary made her comments only a day earlier, on Wednesday, March 29th. She said that China’s behavior is concerning, especially when it comes to developing nations. She also addressed the US lawmakers, stating that Washington was attempting to counter China’s influence in international institutions and in lending to developing countries.
So far, China has given away hundreds of billions of dollars in loans, helping developing countries build infrastructure. However, there is also the fact that lending has tailed off since 2016. The reason for this is the fact that a lot of projects have found themselves unable to pay financial dividends.
Yellen argued that this leaves countries trapped in debt, which certainly does not help promote economic development.
China says that the US should help instead of making unreasonable accusations
China’s government responded on Thursday, stating that any debt problems in the world were only made worse by the US influence. Beijing has blamed the “unprecedented rate” of interest rate hikes brought forth by the US Federal Reserve for things getting out of hand in developing nations.
The country’s Foreign Ministry spokesperson, Mao Ning, stated that China would not accept unreasonable accusations from the US, adding that the United States should take practical action to help developing nations as well, rather than pointing fingers at other countries and making irresponsible remarks.
In other words, China claims that its lending deals were meant to help struggling countries, but the US interest rate hikes have made things worse, and now the US is accusing China of trying to leave developing nations in a debt trap.
The country added that it has always followed all international rules in regard to investment and financing cooperations with developing countries. It has also made sure that everything remains open and transparent and that the involved parties are familiar with the terms of the loans that the country has offered.
So far, China has spent $240 billion bailing out 22 developing countries in a 13-year period between 2008 and 2021. In recent years, this amount has soared, given everything that has happened between 2020 and 2023. More and more countries have started struggling to repay loans that were used to build Belt and Road infrastructure, according to a recent study.
Right now, China is in the middle of a negotiation with Zambia, Sri Lanka, and Ghana, trying to help these nations with debt restructuring, and it has even been criticized for holding up the process. Finally, China urged the IMF and the World Bank also to start offering debt relief in order to help out those who need it.