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China is a major lender to many high-debt nations in Africa and South Asia. Photo: Shutterstock

China willing to join multilateral debt-relief efforts to help poor nations, Li Keqiang tells IMF head

  • Chinese premier tells IMF’s Kristalina Georgieva all parties should work together and ‘shoulder the burden fairly’ to aid highly indebted countries
  • Beijing is the largest bilateral creditor to the poorest countries, but it faces disputes with multilateral lenders over debt restructuring
Chinese Premier Li Keqiang on Wednesday said China was willing to “constructively” participate in multilateral efforts to help debt-laden countries, state news agency Xinhua reported.
In a phone call with International Monetary Fund (IMF) managing director Kristalina Georgieva, Li said addressing the debt problems of low-income countries required the participation of all creditors.

China, the largest bilateral creditor to the world’s poorest states, has been in disputes with multilateral lenders over which parties should spearhead efforts to restructure sovereign debt.

China – the reluctant debt relief leader in a debt-distressed world

It had earlier urged Group of 20 (G20) countries to conduct a fair, objective and in-depth analysis of the reasons behind global debt issues and to resolve problems in an effective manner.

“China is willing to constructively participate in solving the debt problems of relevant countries under the multilateral framework,” Li was quoted by Xinhua as saying.

“At the same time, it advocates that all parties should take joint action and shoulder the burden fairly, so as to help low-income countries overcome economic difficulties and achieve sustainable development.”

Drivers push autorickshaws to buy petrol in Colombo, Sri Lanka, in July 2022. China has indicated it is willing to support the South Asian country’s debt restructuring plans. Photo: Reuters
China is a major lender to many high-debt nations including Ghana, Zambia and Sri Lanka. According to government data, Zambia owed Beijing nearly US$6 billion at the end of 2021.
In January, China indicated it was willing to support Sri Lanka’s debt restructuring plans, a move that would bring the South Asian country closer to a US$2.9 billion bailout from the IMF.

According to Xinhua, Li told Georgieva that the “continued friendly cooperation” between China and the IMF would benefit both parties and help the international community cope with growing challenges.

“China is the largest developing country in the world and an active advocate of South-South cooperation. It has always been committed to narrowing the gap between the North and the South,” Li said.

Georgieva praised China’s efforts in helping developing countries cope with the debt crisis, adding that the IMF was open to strengthening coordination and cooperation with Beijing.

‘The worst is yet to come’: China’s slowdown weighs on global economy

Li also said China responded “decisively” and “in a timely manner” when its economy was hit by the Covid-19 pandemic and other factors last year.

China’s economy grew by 3 per cent in 2022, and while it was above analysts’ expectations, it missed the government’s target of “around 5.5 per cent”.

It marked the first time in more than 40 years that China’s GDP failed to reach the global average, which was roughly 3.4 per cent for 2022.

Li said China’s policies had stabilised its economy and that economic growth was picking up. In January, the IMF upgraded its forecast for China’s gross domestic product in 2023 to 5.2 per cent, largely owing to the nation’s full reopening.

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