US studies say BRI not a debt trap

Two studies released in the past weeks should put to rest the blind accusation that China's infrastructure financing under the Belt and Road Initiative has sucked developing nations into a debt trap.

Without providing any evidence, senior US officials, such as Vice-President Mike Pence, Secretary of State Mike Pompeo and National Security Advisor John Bolton, made such allegations last year.

Deborah Brautigam, a leading authority on China-Africa relations at Johns Hopkins University's School of Advanced International Studies in Washington, dismissed such accusations in an opinion piece in The New York Times on April 26.

In the column, which ran under the headline "Is China the World's Loan Shark?", Brautigam said studies "found scant evidence of a pattern indicating that Chinese banks... are deliberately overlending or funding loss-making projects to secure strategic advantages for China".

The Hambantota Port project in Sri Lanka is often cited by critics, but "that's a special case, and it is widely misunderstood," she wrote.

Brautigam's opinion piece was based on studies conducted by her China-Africa Research Initiative at the SAIS, which included information on more than 1,000 Chinese loans in Africa between 2000 and 2017, totaling more than $143 billion, as well as a study by Boston University's Global Development Policy Center, which has identified and tracked more than $140 billion in Chinese loans to Latin America and the Caribbean since 2005.

Based on the findings, Brautigam concluded that the risks of the BRI are often overstated and mischaracterized.

A report on a study by New York-based independent research provider Rhodium Group, published on April 29, also dismissed the debt-trap accusation against China.

Based on 40 cases of external debt renegotiation between 2007 and this year in 24 countries, the report said asset seizure was a rare occurrence. More often, China was inclined to renegotiate the debts or write them off, it said.

Contrary to accusations that China uses its outsized weight to gain advantage over borrowing nations, the study found that China's leverage in negotiations was limited.

The Brookings Institution, a Washington-based nonprofit public policy organization, interviewed a group of its scholars ahead of the Second Belt and Road Forum for International Cooperation held in Beijing late last month. None of them accused China of debt-trap diplomacy.

Ryan Hass, a senior fellow at the Brookings Institution and a former official for China in the Obama administration, said much of the US government's narrative on the BRI has been built around debt-trap diplomacy. He said he is worried that the US government is making an argument that is more persuasive to itself than to others.

The fact that the BRI has gained more support around the world, as seen in the recent forum in Beijing, is the best answer to those who might have ulterior motives. So far, more than 120 countries have participated in the initiative.

Despite strong US pressure, Italy became the first G7 nation to join the initiative in late March.

European Union officials have started to talk about how to align the EU's Connecting Europe with Asia strategy with China's BRI to achieve synergy.

In Beijing last week, Philip Hammond, Britain's finance minister, described the BRI as having "tremendous potential to spread prosperity and sustainable development, touching as it does potentially 70 percent of the world's population, a project of truly epic ambition".

He offered British expertise on project financing. Indeed, much of China's lending practices in the BRI were learned from Western nations, as well as Japan, which lent to China during the country's reform and opening-up drive in the past four decades.

The BRI may not be perfect yet, but its benign intention of boosting economic growth in developing nations by building infrastructure, something China learned from its own experience, should not be questioned.

Countries should join the BRI to help make it a greater success instead of trying to undermine it.