WASHINGTON (Dow Jones) – US Treasury Secretary Steven Mnuchin has called on the International Monetary Fund (IMF) and the World Bank to launch a “joint action plan” to better illuminate China’s credit-financed infrastructure projects. “Increasingly, we are seeing cases where low-income countries are over-indebted and permanently unsustainable to sovereign creditors such as China or private creditors,” Mnuchin said in a statement at the IMF’s Spring meeting.
Mnuchin’s call for an action plan to clarify the documentation of rising debt is directly addressed to the Chinese initiative “One Belt, One Road”, also called “New Silk Road”. China will be better connected with 64 other countries in Asia, Europe and Africa via infrastructure projects such as motorways, railways, ports and airports.
China has started projects so fast and on such a scale that international observers are struggling to keep an eye on the amount of credit that is being spent by a variety of Chinese local governments and state-controlled institutions, but in the end they are based on one source: Beijing.
According to a report by the Center for Global Development, Djibouti, Tajikistan, Kyrgyzstan, Laos, the Maldives and Mongolia are among the countries that will soon account for more than half of their foreign debt to China. Chinese President Xi Jinping has made the “New Silk Road” a core piece of his plans to expand Beijing’s influence on the global economy.
IMF fears financial problems