The White House’s point person on G7 and G20 affairs, Daleep Singh, singled out China for the failures of the G20’s Debt Service Suspension Initiative (DSSI). “The DSSI and the Common Framework is not impactful enough right now,” said Singh during an online discussion on Wednesday organized by the Center for Strategic and International Studies in Washington. “China is by far the largest official bilateral creditor, multiples larger than Paris Club lenders, and we just need more participation,” he explained the Deputy National Security Advisor.
Singh also criticized China’s lending practices in developing countries for the opacity of its loan contracts, the insistence on full repayment of debts, and for tying collateral to loans that is wholly unrelated to the asset itself.
To date, 73 low and middle-income countries have qualified to participate in the DSSI and $5 billion of debt deferrals have been granted to around 40 countries, according to the latest data from the World Bank.
China will no doubt object to Singh’s assessment that it is not doing enough to support the DSSI. Last fall, Finance Minister Liu Kun said Beijing had extended debt relief to developing countries worth a combined $2.1 billion under the G20 framework, more than any other country.
But Singh’s objections go beyond just the amount of debt deferred to the way that China lends:
- LACK OF TRANSPARENCY: “A lot of Chinese lending activity is highly opaque. Much of the lending is commercially driven even though it’s clearly driven by the government and what I’m saying is that we need every country, especially the largest countries to do their part and take global responsibility to do it with transparency.”
- ONEROUS CHINESE CONDITIONS: “We know the borrowing tenure for many BRI projects is very short and priced at unsustainably high-interest rates. We know there are many non-disclosure clauses that prevent the citizens of recipient countries from even knowing these loans have been made. Other creditors to these countries aren’t aware or don’t have visibility into the terms of the deal. We know the terms of these contracts invite China to take very aggressive action to be repaid or to exert an unusual amount of influence on the debtor country.”
SUGGESTED READING:
- Center for Strategic and International Studies: Assessing the 2021 G7 Summit: The Sherpa Perspective
- Reuters: White House official urges China, private sector to step up global debt relief
