China slams 'west-dominated' financial institutions for 'debt trap' theory

By Alperen Aktas

ISTANBUL (AA) - China slammed the "debt trap theory" on Tuesday and blamed "West-dominated" financial multilateral institutions for the claims.

"The so-called China-made' debt trap' is a lie concocted by certain forces to interfere with and undermine China's cooperation with developing countries," said Foreign Ministry spokesman Wang Wenbin.

"Multilateral financial institutions and commercial creditors dominated by Western countries that spread the 'debt trap' theory of China are the main creditors and debt-servicing pressure sources of developing countries," Wenbin told reporters in Beijing, according to the Global Times newspaper.

China is the world's number one provider of international development funding, according to a report on China's investments overseas, having distributed approximately $1.34 trillion in loans and grants for 22 years, according to a report on China's investments overseas.

The report by AidData said the funds by China have been allocated for 20,985 projects in 165 countries with low and middle-income status.

While G7 nations, including the US, compete with China in international funding, the report notes: "In the long run, it is not clear that the US and its allies have the financial firepower to compete dollar-for-dollar with Beijing."

"The G-7 has a history of over-promising and under-delivering net increases in international development spending. Beijing, by contrast, has a real source of financial strength that allows it to avoid making promises that it cannot keep: foreign exchange reserves that are vastly larger than the official, foreign currency reserve holdings of its central bank," the report that was released Monday, found.

It added China's aid and credit commitments to low- and middle-income countries are now hovering around $80 billion a year -- nearly $20 billion more than that of the US.