Pressure Mounts on China to Offer Debt Relief to Poor Countries Facing Default

Last October, the Communist Party held its once-in-five-years national congress and chose a new team of senior party officials to work with Xi Jinping, the country’s top leader. Maneuvering then began to reshuffle the government’s senior ranks, which had been expected during the annual session of the National People’s Congress in early March, although some changes of financial policymakers were unexpectedly delayed.

China is now ready to focus on addressing a wide range of economic issues, including international debt, the people said. However, Beijing still faces other challenges that may limit its willingness to bargain, including a commercial banking system that faces very heavy losses on loans to real estate developers and does not want to accept large losses on loans to developing countries at the same time.

Chinese officials offered support for the debt relief initiatives in broad terms this week.

Wang Wenbin, a spokesman for the Chinese foreign ministry, said on Friday that China had put forward a three-point proposal that included calling for the I.M.F. to more quickly share its debt sustainability assessments for countries that need relief, and for creditors to detail how they will carry out the restructurings on “comparable terms.”

Following a meeting between Yi Gang, China’s central bank governor, and Mr. Musokotwane of Zambia, in Washington, the Chinese central bank released a brief statement.

“They exchanged views on issues of common concern including bilateral financial cooperation,” it said.

Keith Bradsher contributed reporting from Beijing.

Article source: https://www.nytimes.com/2023/04/14/business/economy/china-debt-relief.html