Courtesy Morning Star

CHINESE loans to countries facing financial ruin in recent years, including Sri Lanka, Argentina and Pakistan, mean that Beijing is increasingly seen as an alternative to the International Monetary Fund, an analysis published in the Financial Times has found.

China’s Belt and Road Initiative had already led to it eclipsing the World Bank as the biggest funder of public works in other countries, but the emergency loans threaten to further undermine Western financial dominance of the global South because China does not attach the usual conditions applied by the IMF, such as cuts to public spending, according to AidData, a research facility at the US William and Mary University.

Beijing has tried to keep these countries afloat by providing emergency loan after emergency loan without asking its borrowers to restore economic policy discipline or pursue debt relief through a co-ordinated restructuring process with all major creditors,” AidData executive director Bradley Parks told the newspaper.

The United States has accused China of trapping” poorer countries in debt to itself as a means of increasing its political influence.

Chinese authorities say that they have written off billions of dollars of debt and that the accusation is fuelled by resentment over the existence of an alternative source of funding for developing countries that does not force them to open up their economies to foreign exploitation through selling off public services and natural resources or opening their markets to transnationals.

Instead of colonialism, China provides solidarity between developing countries. Chinese-financed physical infrastructure projects have become attractive to many developing countries’ governments as an attractive alternative to the US-dominated World Bank,” Jiangxi University of Finance and Economics fellow Mohammad Saiyedul Islam has argued.