Shameless deflection from US' predatory lending: China Daily editorial

US accusations of China's debt traps have become background noise in recent years such is the constancy with which Washington tries to smear China's loans to developing countries. In a speech purportedly on international sovereign lending at the Peterson Institute for International Economics in Washington on Tuesday, Brent Neiman, the top adviser to US Treasury Secretary Janet Yellen, added his voice to the chorus, claiming that China's "unconventional" debt practices and its failure to move forward with debt relief have burdened low- and middle-income countries with debt servicing problems.

Like similar accusations, his claims do not hold water. According to the World Bank, as of the end of 2020, commercial and multilateral creditors accounted for 40 percent and 34 percent respectively of the public external debt structure of 82 low- and lower-middle-income countries, while bilateral official creditors accounted for only 26 percent, with China accounting for less than 10 percent of their foreign debt. And commercial and multilateral creditors, mainly from the West, are the main creditors of developing countries, and the long-term debt repayments of developing countries mainly flow to these Western commercial creditors and multilateral institutions.

Contrary to Neiman's claims, it is these Western commercial creditors and multilateral institutions with the largest share of debt of the lower-income countries that have consistently refused to participate in debt mitigation actions under the pretext of safeguarding their own credit ratings and which have not made their due contributions to easing the debt burden of developing countries.

Among the G20 members, it is China that has written off the most debts for less-developed countries, and which continues to do all it can to help them overcome their difficulties.

China's lending is mainly for infrastructure construction in the less-developed countries, which is crucial to their economic development but which takes a long time to make profits, thus few developed countries are interested in such projects.

While for Western lenders, the calculation is always how much they can gain from their lending, China focuses on the practical and long-term significance to the recipient countries' development. That divergence stems from their divergent outlooks on development — while for the West, development is zero-sum competition and the law of the jungle, China upholds win-win cooperation and the building of a community with a shared future for mankind.

The US Federal Reserve's steep increase of key US interest rates on Wednesday further pulled the rug from under the less-developed countries as it prompted outflows of foreign capital from them, adding to their hardships. Neiman's baseless attack on China's lending practices are, like those that have come before, a way of deflecting blame from the US' predatory corporatist lending.