The Group of Seven nations will use a meeting this weekend in Singapore to criticize China for extending high-priced loans to poor countries in Africa and elsewhere, the Wall Street Journal said Friday. The G7 is expected to issue a statement that, among other things, will take China to task for promoting exports to poorer nations via expensive trade financing, the newspaper said, citing US Treasury Undersecretary Timothy Adams.
"We want to send a strong signal that those kinds of behaviors will be frowned upon," Adams told the newspaper.
What is particularly unacceptable, from the G7 point of view, is the fact that China and others move in as creditor nations a year after the rich countries forgave debts of some 60 billion dollars held by 42 of the world's poorest nations.
"There are some aggressive countries out there that are ramping up their export-credit agencies and looking to take advantage of countries with lightened balance sheets," Adams said.
Some countries, such as Rwanda and Ghana, are again faced with heavy indebtedness as Western governments bail them out only to have emerging lenders swoop in and turn a profit with new loans, the WSJ said.
The report appeared to be at odds with the image China wishes to project, especially in Africa, as a nation that has repeatedly announced loan write-offs to the continent's indebted economies.
In 2000, China forgave 1.2 billion dollars in African debt and in 2003, another 750 million dollars.
The offending nations may not be identified directly in this weekend's statement but the message will be directed at China, followed by India, the WSJ said.
The US Treasury Department was expected to release a paper Friday outlining concerns that several nations that have benefited from debt relief are now slipping back into debt, with China as one of the culprits.
"These lenders have been termed 'free riders' because they indirectly obtain financial gain from international debt forgiveness and grant assistance — through improved country repayment prospects — without paying for it," said the document, according to the WSJ.
Among several examples, the paper will mention Ghana, which has a debt-to-export ratio of just 30 percent after recent debt write-offs, but may see this rise to 150 percent by 2010 due to Chinese lending.
Source: Agence France-Presse
