China implied that the US is to blame for economic turmoil across developing countries, deepening a war of words over responsibility for debt pressures afflicting some of the world’s poorest nations.
(Bloomberg) — China implied that the US is to blame for economic turmoil across developing countries, deepening a war of words over responsibility for debt pressures afflicting some of the world’s poorest nations.
The “radical fiscal policy of a certain developed country is the main reason behind the financial difficulties of a large number of developing countries, including Pakistan,” foreign ministry spokeswoman Mao Ning said at a regular press briefing in Beijing, without naming the US directly.
Chinese officials have previously criticized Washington’s large fiscal stimulus during the coronavirus pandemic, saying it caused a spike in inflation that led the US Federal Reserve to later raise interest rates. Higher US interest rates tend to push up debt-servicing costs across emerging markets.
US officials have directed counter-accusations at China, saying it’s been an irresponsible lender and has hindered progress in multilateral talks over debt relief. China over the last decade has emerged as the largest government lender to developing countries.
Pakistan, Ghana
China now wants “concerted efforts of all parties to play a constructive role in the economic and social developments of Pakistan,” Mao said. She also said Beijing understands that Ghana is facing difficulties, and Chinese financial institutions are talking to the west African nation about properly settling its debt.
READ MORE: Markets Brace for Pakistan Default Risk as $7 Billion Debt Looms
“Multilateral financial institutions and commercial lenders from which developing countries mainly borrow” should participate in debt-relief efforts, Mao added.
Acrimony between Beijing and Washington has been an obstacle in restructuring talks involving countries like Zambia and Sri Lanka. Beijing has demanded that the World Bank offer debt relief, a move traditionally opposed by Washington, the bank’s largest shareholder.
‘Joint Action’
China’s Premier Li Keqiang told the head of the International Monetary Fund that China is open to participating in multilateral efforts to help heavily indebted nations “in a constructive manner,” state media reported this week.
“China is willing to take part in resolving relevant countries’ debt issues,” Li said in a phone call with IMF Managing Director Kristalina Georgieva, according to state broadcaster CCTV. “China maintains that all sides should take joint action and share an equitable burden.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.