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Can China dispel criticism of BRI as form of ‘debt trap diplomacy’?

The Yomiuri ShimbunCan China realize high-quality development assistance as a great power with responsibility? Its actions from now on will be put to the test.

An international forum on the Belt and Road Initiative, China’s scheme to create a mega-economic zone, was held in Beijing, during which Chinese President Xi Jinping declared his nation would pursue “high-quality” BRI projects.

Xi emphasized that when carrying out infrastructure development, China will take into account the financial sustainability of target countries and will also abide by international rules.

China has probably attempted to modify its course of action in light of the adverse winds blowing against the initiative.

Since the initiative was first advocated in 2013, the target countries have spread from those in Asia to Europe, Africa, the South Pacific and Latin America. According to the Chinese government, more than 130 countries have signed BRI cooperation documents with China. The value of direct investment by Chinese companies has reached $90 billion (about ¥10 trillion).

There seems to be no end to voices pointing out that many of those projects disregarded the needs of target countries but prioritized the benefit of Chinese companies. Criticism has also spread that the initiative has bound emerging countries to Beijing financially, by way of a “debt trap,” so as to expand China’s sphere of influence.

Sri Lanka, in exchange for debt forgiveness, concluded a contract to give a Chinese company a 99-year lease on the operating rights of Hambantota Port, which faces the Indian Ocean. There are strong concerns that the key port could be diverted to military use.

Apply Japan’s expertise

The United States is calling for caution, with Vice President Mike Pence criticizing the BRI as debt trap diplomacy by China. Washington has also chosen not to send any high-ranking government official to the international forum held in Beijing.

It is a step forward that China’s top official has indicated his idea of reviewing the initiative, but what is needed is action in accordance with the words. Xi said Beijing will create a framework to check whether the debt of a target country is excessive. Efforts should be made to give concrete form to this idea, thus putting the projects on a healthy footing.

In developing countries in Asia, the demand for building infrastructure is expected to continue growing in the future, too, but there are many cases in which sufficient funds cannot be procured. It is essential that China promotes projects that will contribute to the development of target countries and regions, and provide funds and technologies.

Japan calls on China to attach importance to projects’ openness, transparency, economic efficiency and the target country’s financial soundness. Japan has taken a stance of cooperating with China in infrastructure investment in third countries if these four requirements are met.

It is important for Japan to push China to make its investments meet international standards, through co-financing of the Japan-led Asian Development Bank (ADB) and China-established Asian Infrastructure Investment Bank (AIIB).

Japan should continue vigorous involvement in regional development by, for example, making use of its ample experience in assistance to developing countries and providing legal advice about the conclusion of project contracts.

(From The Yomiuri Shimbun, May 13, 2019)Speech



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