After seeing the 'One Belt One Road' OBOR initiative in practice for the past few years, there are reasons to question the Chinese Communist Party's largesse, a top American diplomat has said and alleged that Beijing has never supported globally recognised transparent lending practices.
Around the world, and certainly in South and Central Asia, China is pressing countries to sign OBOR deals emphasising peace, cooperation, openness, inclusiveness, mutual learning, and win-win cooperation, Acting Assistant Secretary of State for South and Central Asia Alice Well said at an event at the Wilson Center think tank on Thursday.
"That sounds great.... But after seeing OBOR in practice for the last few years, there are reasons to question the Chinese Communist Party's largesse," Wells said in response to a question.
For example, China offers substantial financing, usually as loans, but Beijing is not a member of the Paris Club and has never supported globally recognised transparent lending practices, she said.
According to an estimate released by the Kiel Institute, China is the world's largest official creditor, lending over USD five trillion worldwide, but it does not publish or even report overall figures on its official lending, she alleged.
So rating agencies, the Paris Club or IMF are not able to monitor those financial transactions, she said.
Chinese Communist Party officials now recognise that they need to use the language of openness and accountability, but the fact remains that the country stands outside of global efforts, including those of the International Monetary Fund (IMF) and the World Bank, to improve transparency that enhances policy-making, prevents fiscal crises and deters corruption, she said.
In Sri Lanka, even though multiple feasibility studies repeatedly rejected the commercial viability of a large scale port facility at Hambantota, Beijing went ahead and loaned the government over one billion dollars for the project.
"The result: Sri Lanka struggled to service those loans and eventually handed over a 99-year lease on the port to Beijing in return for debt relief," Wells said.
Wells said in Sri Lanka a number of Chinese-financed projects sitting vacant and unused, including a USD 104-million telecommunications tower and a USD 209-million international airport in the south with zero regularly-scheduled flights.
The Center for Global Development found in 2018 that eight OBOR recipient countries, including Pakistan, Maldives, Tajikistan and Kyrgyzstan, were at high risk of debt stress due to Chinese financing, she said.