The Financial Times says China has lent more money than the World Bank to developing countries in the past two years. Some people are now accusing China of aggravating the debt burden of the already heavily-indebted countries by lending more funds to them. But this accusation is baseless, says an article in People's Daily. Excerpts:
Many developing countries, especially those in Africa, were major capital importing countries from the 1950s to 1980s. They used to take loans from Western countries and financial giants, and their debts multiplied because of the high interest rates.
Though the creditor nations offered some debt reduction packages, their terms were so harsh that they jeopardized the economic and political sovereignty of the African countries.
In contrast, China has never politicized its loans to the heavily-indebted countries or forced them to repay. In fact, it has foregone many of the loans, and by the end of 2009, it had cancelled 25.6 billion yuan ($3.9 billion) in debts of the heavily-indebted countries.
Some people have also criticized China for weakening the debt sustainability of the already heavily-indebted countries.
The critiques should understand that lack of finance forces these countries to opt for foreign loans to develop their economies. And China has given them preferential loans and export buyer's credit, both of which entail much lower interest rates than those imposed by international commercial institutions and other countries.
Sino-African cooperation has been mutually beneficial. In recent years, it has propelled more than 20 percent of Africa's economic growth.
(China Daily 04/13/2011 page9)