Pledge to ease 'debt trap' fears

World | AFP, Stella Wong 26 Apr 2019

China launched a staunch defense of its Belt and Road global infrastructure project as it opened a summit with a pledge to ease concerns about debt linked to its signature foreign policy.

President Xi Jinping's initiative offers to bring much-needed modern infrastructure to developing countries, but the United States has dubbed it a "vanity project" and critics warn it is a "debt trap" favoring Chinese companies.

Huang Kunming, a member of the powerful Politburo, said at the opening of the three-day Belt and Road Forum in Beijing that there have been "some misunderstandings and unfounded rumors" about the program that they hope to clear up.

But in a nod to the concerns over loans, Finance Minister Liu Kun said China would release a framework to "prevent debt risks," according to state-owned China Securities Journal.

China must properly address "issues of environmental protection and debt management that the international community pays close attention to," said Zheng Zhijie, governor of the China Development Bank.

The state policy bank has doled out much of the Belt and Road-related loans since 2013, with Zheng saying it had extended US$190 billion (HK$1.48 trillion) in financing to 600 projects.

International Monetary Fund chief Christine Lagarde told the forum that "sound financial regulation, transparent rules for investment, and attention to fiscal sustainability" were needed to successfully open capital markets, according to her prepared remarks.

Chief Executive Carrie Lam Cheng Yuet-ngor said Hong Kong's biggest advantage that can best meet the country's needs is its financial services, given its status as a global hub. In her speech at the forum, she said many Belt and Road economies aspire to attract foreign investment in infrastructure.

She said there is an estimated demand for funding in the range of US$1.7 trillion annually in Asia's developing countries between 2016 and 2030. "Hong Kong is a one-stop destination of choice to serve as a premier financial and risk management center for the Belt and Road's big-ticket projects," she said.

Under the One Country, Two Systems principle, Lam said Hong Kong has maintained its market-based financial system, which is underpinned by the rule of law.

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