Chinese Money Should Play by the Rules
China needs to join a global effort to prevent a wave of debt crises.
Sri Lankan monks protesting at Hambantota.
Photographer: Ishara S. Kodikara/AFP/Getty Images
Global worries over trade wars, central bank rate hikes and geopolitical instability have hammered emerging-market debt in recent months. The fact is, over the past decade, many developing and low-income countries have simply borrowed too much. They borrowed from the markets, from banks and from other countries. In particular, they borrowed from China, which has averaged more than $100 billion in annual financing commitments since 2010.
Those bills are now coming due. As one of the largest providers of emerging-market credit, China needs to be part of a global effort to prevent a wave of debt crises. It should start by joining other sovereign lenders in the Paris Club, the world’s multilateral framework for official creditors.