By Eric Ng
From the article:
Debt relief by China can prevent financial crises in developing nations included in Beijing’s “Belt and Road Initiative”, but greater project transparency and better debt management are needed to boost the ambitious programme’s sustainability, according to Standard Chartered.
“China’s ability, and apparent willingness, to provide bilateral debt relief suggests a low risk of systemic debt fallout,” said Kelvin Lau Kin-heng, the Greater China senior economist at the bank, which derived about 41 per cent of its pre-tax underlying profit from Southeast and South Asia, the Middle East and Africa – the key markets of the initiative – in the year’s first half.
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Eight belt and road nations – Djibouti, the Kyrgyz Republic, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan – are highly vulnerable to debt distress, with their debt owed to China making up 44 to 91 per cent of their total public and public-guaranteed external debt, according to the Washington-based non-profit think tank Center for Global Development.