China accused of hoodwinking poor nations, debt overload
- Washburne has warned that the Chinese strategy has created a debt trap for many poor nations.
- He is not the first to warn of growing debt linked to Chinese infrastructure projects.
- IMF boss Christine Lagarde also cautioned China’s Belt and Road partners against considering the financing as “a free lunch”.
China is saddling poor nations with unsustainable debt,Ray Washburne, head of the U.S. Overseas Private Investment Corporation (OPIC) has said.
According to him, the large-scale infrastructure projects run by the Chinese are not economically viable.
This comes even as the Kenyan Government investigates claims that Chinese workers abuse their Kenyan counterparts employed for the Standard Gauge Railway (SGR).
The criticism comes as Washington seeks to ramp up development finance in the face of China’s global ambitions.
President Donald Trump is in a trade war that has sent ripples through economies around the world.
Unveiled in 2013, President Xi Jinping’s “Belt and Road” initiative aims to build an infrastructure network connecting China by land and sea to Southeast Asia, Central Asia, the Middle East, Europe and Africa.
China has pledged $126 billion for the plan, which has been praised by its supporters as a source of vital financing for infrastructure-starved partners in the developing world.
However in an interview with Reuters in Johannesburg, Washburne warned that the Chinese strategy created a debt trap for many poor nations.
“Just look at any project in these countries and they’re overbuilding the size,” he said. “We try to have countries realize that they’re indebting themselves to the Chinese.”
Washburne is not the first to warn of growing debt linked to Chinese infrastructure projects.
International Monetary Fund (IMF) Managing Director Christine Lagarde in April cautioned China’s Belt and Road partners against considering the financing as “a free lunch”.
Sri Lanka formally handed over commercial activities in its main southern port in the town of Hambantota to a Chinese company in December as part of a plan to convert $6 billion of loans that Sri Lanka owes China into equity.
U.S. officials have warned that a strategic port in the tiny Horn of Africa nation of Djibouti could be next, a prospect the government there has denied.
Washburne also voiced concern over a $360 million expansion of the airport in Zambia’s capital Lusaka currently being carried out with financing from the Exim Bank of China.
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