Ta Kung Pao & Wen Wei Po

At the beginning, you mentioned that there are a few countries which have raised questions about the Belt and Road Initiative. Recently, some foreign media reported that the initiative has brought a debt trap for relevant countries, accusing China of attempting to gain controlling interests in projects by providing loans regardless of the host countries' overall liabilities and debt-paying abilities, and thus adding to the countries' debt burden. What are your comments on this?

Ning Jizhe:

First of all, the projects of the Belt and Road Initiative have brought effective investment and valuable assets to relevant countries and contributed to their economic growth and improved livelihood, instead of causing a so-called debt trap. Projects of the Belt and Road Initiative, be they related to connectivity or production capacity cooperation, must go through a sound feasibility study and strict debt approval process. We are the witness, so we are clear on how strict it is to get bank loans. There are requirements about capital contribution, debt-to-asset ratios, and financial returns. If a project doesn't meet the requirements, it will not be allowed to pass. Of course, there are some infrastructure projects that may take a long time to get the investment returns, but the assets are there and they will appreciate in value. 

To our knowledge, the debt issues in some countries as reported by some foreign media are not necessarily connected with the Belt and Road construction and relevant projects. Some countries already have very high levels of debt for many years mainly due to their long-term borrowing from other countries as well as international financial institutions. China is a late comer. It is not the biggest creditor.

Second, for jointly built projects and investment cooperation with relevant countries, China has always attached great importance to debt management. With regard to the investment and financing of the projects under the Belt and Road Initiative, China offers loans to projects based on the conditions of their host countries to avoid increasing the countries’ debt risk and fiscal burden. Before offering the loans, Chinese banks will strictly review the borrowers’ overall liabilities and debt-paying abilities, and continuously monitor the sovereign risks of relevant countries after offering the loans. For example, the China Development Bank has set up the system of sovereign credit rating and national risk quota management. The Industrial and Commercial Bank of China, China Export and Credit Insurance Corporation and other financial institutions have also established relevant evaluation, monitoring and management systems.

Developing the economy and improving people’s livelihood are the primary goals of developing countries. For these developing countries who are in urgent need of money, Chinese banks will also design financing structures to help them sustainably manage their debt, such as the case of the fiber optic cable projects in Cambodia, and Yamal liquefied natural gas project in Russia, of course Russia is not a developing country, but an emerging economy. In any case, all these projects are supported by a system that combines equity investment and bank loans, and have achieved good results.

I would like to answer the questions of the journalist from Singapore about the China-Pakistan Economic Corridor (CPEC). Over the past four years, since the CPEC has been put forward, it has been progressing well and has yielded many profits. In November 2017, both sides signed the Long-term Plan for the China-Pakistan Economic Corridor. Among the projects proposed at the early stage, we have already launched 18 projects, including the building of power plants, which solves the problem of energy shortages that has been plaguing Pakistan for many years. Of course, the CPEC also includes projects relating to transportation, industrial cooperation and ports. I will not list them out one by one here. The new leadership of Pakistan has clearly expressed that the CPEC is not built by any one party or people. It is instead a project that involves the cooperation between all Pakistani and Chinese people, which will definitely become a great success.

Separately, on the East Coast Rail Link project, as some of you have mentioned earlier, as you all know, the Prime Minister of Malaysia Mahathir Mohamad has just concluded his visit to China. He has clearly stressed that his support of China’s Belt and Road Initiative, and welcomed Chinese enterprises to expand their investment in Malaysia. He also mentioned the financial difficulties that Malaysia is facing, and hopes that China would offer support to solve some of these issues together.