Chinese loans to poor countries could cause financial crisis, warns Berlin

2022-05-27T15:18:19.242Z

China has long been accused by the West of using the "debt trap" to exert influence over other countries.

The influx of long-term loans granted by China to poor countries, particularly in Africa, constitutes "

a serious danger

" of seeing the world plunge into a new financial crisis, German Chancellor Olaf Scholz warned on Friday.

To discover

Taxes 2022: all about your tax return

Read alsoThe G20, including China, wants to reduce the burden of African debt

“

There is a really serious danger of seeing (trigger) a next big debt crisis in the countries of the South linked to the loans granted by China, which itself does not have an overview because of the many actors involved

," said the Social Democratic Chancellor during a debate at the Congress of Catholics being held in Stuttgart.

“

It would plunge China and the countries of the South into a great economic and financial crisis and, moreover, would not spare the rest of the world

,” insisted the leader.

“

So this is a serious concern.

China has long been accused by the West of using the "

debt trap

" to exert influence over other countries.

A desire to push China to join the Paris Club

The argument is that China lends money long-term to other states, which end up having to cede control of key assets if they can't repay it.

Beijing rejects these accusations, arguing that its loans are aimed at alleviating poverty.

Scholz said he wants to convince China to join the Paris Club, an informal group of official creditors whose role is to find coordinated solutions to countries' payment difficulties, by negotiating relief or rescheduling of their debt.

Read alsoChinese money no longer flows abroad

One of the great ambitions we have is to integrate China

" into this club, he said.

To counter Chinese influence, the European Union unveiled a development aid plan called “

Global Gateway

” a few months ago, he recalled.

In this context, the EU intends to invest more than 150 billion euros in Africa over the next few years in infrastructure, transport and renewable energy projects.

The initiative is seen as the European response to the "

new silk roads

", the vast Chinese program of loans in dozens of countries in order to develop ports, roads, railways or digital infrastructures.

Source: lefigaro

All news articles on 2022-05-27