China urges global lenders' involvement in developing nations' debt

[March 02, 2023]  NEW DELHI (Reuters) -Chinese Foreign Minister Qin Gang called on global financial institutions on Thursday to play an active role in restructuring the debt of developing countries. 

China, the world's largest bilateral creditor, has criticised multilateral lenders for not accepting losses, or haircuts, on loans to low-income countries while Beijing is being asked to do so on credit it has extended on its own.

Chinese Foreign Minister Qin Gang and India's Foreign Minister Subrahmanyam Jaishankar shake hands before the start of G20 foreign ministers' meeting in New Delhi, India, March 2, 2023. India's Ministry of External Affairs/Handout via REUTERS

"We hope that multilateral financial institutions and commercial creditors will be actively involved in the debt treatment of developing countries," Qin said during a gathering of foreign ministers from the Group of 20 (G20) leading economies in New Delhi.

The G20 set up a Common Framework in late 2020 to offer relief to low-income countries facing mounting pressures resulting from COVID-19 and tightening global financial conditions amid the Ukraine war.

"China has put forth relevant initiatives under the G20," Qin said. "China has suspended more debt service payments than any other G20 member, and participated in the debt treatment under the Common Framework."

The United States has repeatedly criticised China over what it considers to be "foot-dragging" on debt relief for dozens of low-and middle-income countries including Sri Lanka.

Last week, China urged G20 nations to conduct a fair, objective and in-depth analysis of the causes of global debt issues and to "resolve the problem in a comprehensive and effective manner".

(Reporting by Krishna N. Das, writing by Sudipto Ganguly; Editing by Miral Fahmy and Gareth Jones)

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