Financial Media Concede China Is a Good Creditor To Have
June 10, 2019 (EIRNS)—An article in the financial news website Quartz Africa, although intended to have just the opposite effect, reveals that China is actually a good creditor to have. Entitled, “Ethiopia and Kenya Are Struggling To Manage Their Chinese-Built Railways,” the article opens with the following:
“In the wake of the Belt and Road Initiative (BRI) Forum in Beijing six weeks ago, Ethiopia gained another Chinese debt-concession ... [and] also received a cancellation on all interest-free loans up to the end of 2018. This was on top of previous renegotiated extensions of major commercial railway loans agreed earlier in 2018,”
wrote author Yunnan Chen.
China has further written off a billion dollars of losses on Ethiopia’s Addis Ababa-Djibouti standard gauge railway (SGR) line, mostly caused by lower than anticipated usage stemming from a lack of inland infrastructure to connect the rail line to other urban or industrial centers. In late 2018, the Chinese restructured the terms of a loan, extending the repayment period from 15 to 30 years.
The Wall Street Journal, too, ran a June 9 column, “Who’s Afraid of the Belt and Road?” by Gerard Gayou, to argue that “Beijing has a strong preference for debt renegotiation when partner countries get in the red.” (Though Gayou does not make comparisons, Beijing is also not likely to turn debtor nations over to vulture funds and asset-seizing courts as the U.S. Treasury did—while the Federal Reserve piously wrung its hands over it—to Argentina during the Obama Administration.)
Gayou cites a Rhodium Group report in April which “found 40 Chinese debt renegotiations with 24 countries, most ... since 2007. Together they represented around $50 billion of renegotiated debt, including write-offs, deferments and refinancing. Debt forgiveness is rare for more expensive projects, but so are asset seizures.”