China flexes loan muscles in SAsiaSouth Asian countries including Nepal received ever increasing bilateral loans from China, in order to boost their economies and ultimately reduce the widening trade imbalance between China and these countries.
South Asian countries including Nepal received ever increasing bilateral loans from China, in order to boost their economies and ultimately reduce the widening trade imbalance between China and these countries.
This was the view offered by Director General of Yunnan Foreign Affairs Office Li Jiming during the first China-South Asia Cooperation Forum in Kunming, the capital of Yunnan Province. The event was held on the sidelines of the fifth China South Asia Exposition.
Li said that China increased the bilateral support to South Asian countries to bring out the potential of these countries. “Rather than forcing these countries in long term debt trap, we have increased the funding in the region to build necessary infrastructure that could help in enhancing their export potential,” he said.
Recently, China extended its total bilateral loan amount to countries such as Nepal, Myanmar and Pakistan by a significant amount. Despite the financial support from China, the trade deficit of these countries with China has been increasing year on year.
In Nepal alone, the gap between import and export values with its northern neighbour has widened by 21.4 percent to Rs124.57 billion in the first ten months of this fiscal year, according to Nepal Rastra Bank statistics. The figure stood at Rs91.18 billion during the review period in 2015-16. Denying the possibility of debt trap in loan receiving countries, Li said that China has been providing concessional loans at the government level targeting to support development of infrastructures. “We have been providing loans for business purpose only after serious consideration that involves a thorough study of feasibility report and financial calculation.”
Li said the newly formed forum is part of China’s effort to further the ‘Belt and Road Initiative,’ which is expected to bring together South Asian countries that share a geographical vicinity and cultural affinity with China.
According to him, the secretariat of forum will be formed as per consensus with these countries.
The recently held forum meeting has identified the key areas of cooperation that include interconnectivity, business, local government, poverty reduction, finance and people-to-people exchanges, among others. “China will work together with South Asian countries to make the cake of common interest bigger and strengthen the ties of result-oriented and win-win cooperation for common development,” reads a press statement issued by the Yunnan Foreign Affairs Office.