Large investments announced at the Belt and Road Forum have raised concerns that poorer countries’ debt to China could rise further.
China’s President Xi Jinping has promised foreign companies better access to the country’s huge market and more than €100 billion in financing Belt and Road Initiative (BRI) projects in developing economies.
The announcements were made in Xi’s speech at the opening ceremony of the Belt and Road Forum for International Cooperation in Beijing on Wednesday.
The president also praised his 10-year-old BRI, which has been building global infrastructure and energy networks, connecting Asia with Africa and Europe through land and sea routes.
Two Chinese-backed development banks - the China Development Bank and the Export-Import Bank of China - “will each set up a 350 billion yuan (€45.3 billion) financing window”, Xi Jinping said.
China’s leader promised an additional injection of 80 billion yuan into the Silk Road Fund, a Chinese sovereign fund to foster investment in countries along the BRI.
Finally, he revealed that “cooperation agreements worth $97.2 billion (€92.2 billion)” had been concluded at the Forum’s CEO conference.
However, these massive loans have burdened poorer countries with heavy debts, in some cases leading to Beijing taking control of those assets.
An oft-cited example is Sri Lanka's Hambantota International Port, largely financed by China. Drowned in debt, the Sri Lanka Ports Authority signed a 99-year concession agreement with a Chinese company.
Critics from the US, India and others say that Beijing is engaging in “debt-trap diplomacy”, by making loans it knew governments would likely default on and therefore, increasing the Chinese political leverage.
Indonesian President Joko Widodo, whose country owes China more than €19 billion, emphasised in a speech that BRI projects "must not complicate [countries'] fiscal conditions".
Christoph Nedopil, director of the Asia Institute at Griffith University in Australia, wrote in a report that China will also “monitor the debt sustainability of BRI countries more closely.”
Xi opens his arms to foreign investors
“We will remove all restrictions on foreign investment access in the manufacturing sector,” Xi Jinping said.
The president announced China would further open up “cross-border trade and investment in services, expand market access for digital and other products, and deepen reform in state-owned enterprises, digital economy, intellectual property and government procurement”.
The pledges of market openness from Beijing come at a time when China's economy is slowing down and foreign investment has plunged.
Furthermore, Xi alluded to efforts by the US and its allies to reduce their reliance on Chinese manufacturing and supply chains.
Reiterating China’s complaints that such moves are meant to limit China's growth, he said that “viewing others’ development as a threat or taking economic interdependence as a risk will not make one’s own life better or speed up one’s development.”
“China can only do well when the world is doing well. When China does well, the world will get even better,” Xi added. “We oppose unilateral sanctions, economic coercion and the decoupling and severance of chains.”
Western leaders insist that their goal is to "de-risk", not "decouple", from China, saying that they want to diversify supply chains that have become overly dependent on the world's second-largest economy.
Russian President Vladimir Putin attended the ceremony in Beijing, on his first trip outside the former Soviet Union since the International Criminal Court issued a warrant for him in March over his alleged involvement in the mass abduction of children from Ukraine.
Shortly before Putin’s speech, a handful of European delegates, including former French Prime Minister Jean-Pierre Raffarin, walked out of the room, according to journalists on site.