Virtual Hearing - Examining Belt and Road: The Lending Practices of the People’s... (EventID=112661)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Tuesday, May 18, 2021, at 10:00 a.m. (ET) National Security, International Development, and Monetary Policy Subcommittee Chairman Himes and Ranking Member Hill will host a virtual hearing entitled, “Examining Belt and Road: The Lending Practices of the People’s Republic of China and Impact on the International Debt Architecture." - - - - - - - - Witnesses for this one-panel hearing will be: • Professor Anna Gelpern, Anne Fleming Research Professor at Georgetown Law and nonresident senior fellow at the Peter G. Peterson Institute for International Economics • Mr. Scott Morris, Senior Fellow, Center for Global Development • Professor Odette Lienau, Professor of Law, Associate Dean for Faculty Research and Intellectual Life, Cornell University Law School • Mr. Jaime Atienza, Debt Policy Lead, Oxfam • Mr. Sebastian Horn, Economist, Kiel Institute for the World Economy Background As the COVID-19 pandemic has affected the global economy, many vulnerable countries have moved closer to default on their sovereign debt obligations. Even before the pandemic began, a joint IMF-World Bank staff paper published in February 2020 assessing public debt vulnerabilities in lower-income economies found half of such economies to be at high risk of or already in debt distress. The sustainability of debt levels in many of these countries, according to IMF economists, hinged on a continued benign global environment and relatively stable commodity prices. The IMF Board of Directors noted that the increased reliance on debt provided on commercial or near commercial terms is raising debt service burdens and making low-income countries more vulnerable to domestic and external shocks. The IMF Directors called for greater debt transparency and more effective coordination among official creditors, critical elements for timely and effective debt resolutions. Within a month of Board consideration of the staff report, over 100 countries worldwide had instituted either a full or partial lockdown to prevent the spread of the Coronavirus disease 2019 (COVID-19), and many other countries had recommended restricted movement for some or all of their citizens. The subsequent contraction in global trade, the service sector, tourism, a drop in commodity prices, and a reduction in remittances was a huge economic shock to developing and emerging market countries. To date, continued low interest rates, liquidity support from the international financial institutions, including grants from the Asian Development Fund and an expected a temporary suspension of debt service from the poorest countries to official bilateral creditors have been able to stave off a pandemic-induced sovereign debt crisis in the rest of the world. China's Belt and Road initiative China's Belt and Road initiative, or BRI, is a multi-trillion dollar infrastructure financing initiative announced in 2013, and is President Xi Jinping's signature foreign policy vision for putting China at the center of the global economy. Some people see the Belt and Road, in particular the ports that China is building, as having military implications. Almost all infrastructure is dual-use–the same port built to accommodate a large commercial vessel could also accommodate a military vessel. Telecommunications have not only a business purpose but also a security and potentially an espionage application as well. The String of Pearls theory, which predicts that China is trying to expand its military presence by building civilian maritime infrastructure along the Indian Ocean periphery, may be shaping into reality. In Sri Lanka, China loaned about $1.5 billion for a new deep-water port. But by 2017, it was clear Sri Lanka couldn't repay the loan, so instead, they gave China control of the port as part of a 99-year lease. China also controls a strategic port in Pakistan, where it has a 40-year lease.10 It's pushing for a similar agreement in Myanmar, and it just opened a Chinese run and owned naval base in Djibouti. China-backed infrastructure projects have a reputation for size and speed in implementation, but they have also provoked a backlash for their rejection of international development standards, lack of transparency, failure to use aid to promote good governance, and unsustainable debt practices that can undermine country and global stability.12 Through BRI, low-income and emerging market countries now owe more to China than to all other major creditor governments combined. According to one study, developing and emerging market governments owe $370 billion to China compared to $246 billion in debt owed to the group of 22 Paris... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407751