BEIJING — Chinese loans to countries and regions along the Belt and Road will not add to local debt burden, while risks rising from such loans are under control, bank officials said on May 11.
Ding Xiangqun, vice-president of China Development Bank (CDB), said at a news conference that the majority of projects supported by the CDB generated sufficient cash flow to pay back the principle and interest.
“It’s quite biased to say that our loans add to local debt burden as we choose the projects very carefully, making sure they have economic value,” said Ding.
She added that the bank also had strict credit requirements for sovereign loans, making sure the terms on these loans are in line with those required by the International Monetary Fund.
Sun Ping, vice president of the Export-Import Bank of China (China Exim Bank), said the bank has established risk-control mechanisms to evaluate the feasibility of loans based on the upper limit of debt that each country could bear, and widespread defaults on sovereign debts are unlikely.
“With strict measures to mitigate risks, I’m confident that the level of nonperforming loans will remain under control,” said Sun.
Since the launch of the Belt of Road Initiative in 2013, China Exim Bank has supported more than 1,200 projects related to the initiative, with contracted value surpassing 700 billion yuan (about $101.4 billion).
By the end of 2016, CDB had given than $160 billion of loans to countries along the Belt and Road to support development in industries such as infrastructure and energy resources, according to Ding.