L‘The arrival of long-term loans from China to poor countries, particularly in Africa, poses a “serious risk” that the world will plunge into a new financial crisis. Chancellor Olaf Scholes warned on Friday. at the same time dMany economies are still recovering from the effects of the Govt-19 epidemic which has increased financial pressures, with some of these countries namely Sri Lanka and Zambia benefiting from large loans while China is benefiting. Former China’s central bank governor Zhou Xiaochuan acknowledged at a conference last month that there are debt problems in partner countries.
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The debate about Chinese loans has been reignited
“There is a very high risk of seeing (triggering) the next major debt crisis related to southern China’s loans, which is not superficial as many actors are involved,” the social democrat said. Chancellor at a debate at the Catholic Day in Stuttgart. During the conference, he questioned the fact that Europe is lagging behind when Chinese money builds roads and African universities, thereby increasing Beijing’s influence on the continent. “It will plunge China and the South into a major economic and financial crisis, not the rest of the world,” he said. “So this is a serious concern.”
negotiations follow
Western nations have long accused China of using itThe “debt trap” for influence in other countries. The argument is that China lends money to other countries on a long-term basis and must relinquish control of key assets if it is unable to repay them. Beijing denies the allegations, arguing that its debt is aimed at eradicating poverty.
Scholes said he would like China to join the Paris Club, an informal group of official lenders whose solution is to find integrated solutions to default, relief or restructuring of their debt. One of our big ambitions is to bring China into this club, he said. In order to counteract Chinese influence, the EU launched a development aid program called “Global Gateway” a few months ago, he recalled. In this context, the EU plans to invest more than 150 billion in infrastructure, transport and renewable energy projects in Africa over the next few years. The initiative is seen as Europe’s response to China’s broader Silk Roads project, which is providing loans to modernize ports, roads, railways or digital infrastructure in dozens of countries.
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