China dismisses debt trap claims on its lending

China continues to grab the attention of the doubting Thomases owing to his massive lending to African Countries. Speculations abound has been terming the move as a debt trap due to the inability of the borrowing states to service the loans.

However, China has denied reports that it is aiming at driving countries into a debt trap in the upcoming second Belt and Road Initiative, scheduled later this month.

The forum, hosted by President Xi Jinping, will be held on April 25 and will bring together more than 40 foreign governments and representatives from more than 100 countries—including Kenya’s President Uhuru Kenyatta.

“We have noticed that some people have expressed different views about the BRI, claiming that the Initiative is China's geopolitical tool and could cause some countries to fall into a debt trap. Such views are less than objective or balanced. They are simply a misunderstanding, misrepresentation and even biased view of the BRI,” said Yang Jiechi, a Member of the Political Bureau of the Central Committee of the Communist Party of China and Director of the Office of the Central Commission for Foreign Affairs, who oversees the preparations for the Forum that was first held six years ago.

President Kenyatta has defended his government against, claims that it will be driven into a debt trap, with the continued borrowing from China.

Kenya is among countries angling to reap big from the forum, with the expected signing of Sh368 billion loan for the second phase of the Standard Gauge Railway (SGR).

“Through six years of hard work, the BRI has laid its groundwork and entered the stage of all-around growth; it is bearing fruit and will create more opportunities for cooperation,” Yang said of the ambitious programme aimed at connecting Asia with Africa and Europe via land and maritime networks along six corridors to accelerate regional integration and boost trade.

“The opportunities come with the BRI's growing international influence, moral appeal and cooperation potential. Against the backdrop of mounting protectionism and unilateralism in the world, the BRI principle of consultation and cooperation for shared benefits has gained wide recognition. Support for the BRI is the mainstream view of the international community, and the opportunities created by BRI cooperation are widely appreciated in the global community,” he said.

At the seminar marking the BRI's fifth anniversary last August, President Xi Jinping highlighted the need to move BRI cooperation toward quality development.

“No one is in a better position to repudiate the so-called debt trap allegation than the BRI participants themselves. As a matter of fact, the governments, business communities and the general public of many countries that have participated in and benefited from the BRI have spoken up and debunked such groundless assertions with facts and figures,” Yang said.

Decisions made under the BRI framework, he said, whether project selection or investment and financing cooperation, are all based on full consultation among the parties and on the basis of conducting a due risk assessment and investment feasibility study.

China and other 27 countries have jointly adopted the Guiding Principles on Financing the Development of the Belt and Road, which highlights the need to ensure debt sustainability in project financing. In case our cooperation partners face difficulties in servicing debts, China will properly address this issue through friendly consultation, and will never press them for debt payment. As a matter of fact, no country has got trapped in a debt crisis since its participation in the BRI. Quite on the contrary, it is through participating in BRI cooperation that many countries have got out of the trap of "no development".

Kenya is a beneficiary of loans from China, having built the Standard Gauge Railway from Mombasa to Nairobi at the cost of Sh327 billion