China Tells US to ‘Solve Its Debt Problem’ Instead of Worrying About Zambia’s
The People’s Republic of China has fired back at US criticism of its relationship with Zambia, arguing that Washington should address its own crisis first.
A statement released by the Chinese Embassy in Lusaka on Tuesday has urged the US Treasury to focus on “solving the US’ own domestic debt problem."
“The biggest contribution that the US can make to the debt issues outside the country is to act on responsible monetary policies, cope with its own debt problem and stop sabotaging other sovereign countries’ active efforts to solve their debt issues,” the statement blasted.
“We do hope [US Treasury Secretary Janet] Yellen can manage to prevent the US from defaulting on its obligations and protect the country’s credit,” the embassy added, referring to the financial crisis unfolding in Washington that threatens to cause a default
on the US’ national debt.
However, the embassy added that “even if the US one day solves its debt problem, it is not qualified to make groundless accusations against, or press for, other countries out of selfish interests, because it cannot at all alleviate [the] US’ tremendous responsibility for the reason of the world debt issues, let alone the fact the US’ domestic debt problem is now worsening the world’s economic and financial stability.”
While Yellen was in Zambia recently, she criticized China
for causing “problems” for the country, including burdening it and several other African nations with “a legacy of unsustainable debt.”
She called on Beijing to help Lusaka settle its debt problems after Zambian President Hakainde Hichilema told Western financial representatives that he wanted to conclude debt restructuring talks soon or it would "distort all the good efforts that we have been making to reconstruct the economy and bring investment."
“I know the Chinese have been a barrier to concluding the negotiations,” Yellen said, adding that while at the World Economic Forum in Davos, Switzerland, last week, she specifically raised the issue of Zambia [with Chinese officials] and asked for their cooperation in trying to reach a speedy resolution. "And our talks were constructive.”
The Chinese embassy’s statement responded directly to Yellen’s claims about the talks, saying: “China’s efforts have made some positive progress. We look forward to [the] US’ constructive role in the process.”
A former British colony, Zambia has struggled with persistent underdevelopment since winning independence in 1964. In 2020, Zambia became the first country to default on its debt during the COVID-19 pandemic. The Common Framework was created at that time by the G20 to coordinate debt relief beyond the Paris Club of major creditors, most notably China, to provide Lusaka with relief.
18 August 2021, 00:56 GMT
However, western lenders were frustrated when then-President Edgar Lungu looked to Beijing for help and made moves to nationalize the country’s valuable copper mining industry instead of the kind of privatization and budget-cutting typically mandated by the International Monetary Fund. When Hichilema, Zambia’s richest man and a western-educated financier, won elections in 2021, investors in Europe and North America celebrated.
Now, the country has become a key part of the narrative of “debt-trap diplomacy” pushed in the West, which claims that Chinese banks engage in predatory lending in Africa and Asia in order to strong-arm governments into adopting pro-Beijing politics.
In reality, China routinely forgives debt accumulated by nations that borrow from it, and its loans carry less conditions mandating internal policy changes than those of western lenders, like the IMF. That has made China the preferred lender across much of the Global South.
In the case of Zambia, China owns just 22% of the country’s debt, with 46% owed to western private lenders like Black Rock, 8% to governments other than China, and 18% to multilateral institutions like the IMF. According to the UK-based NGO Debt Justice
, some of those private lenders are set to make profits of between 75-250% from Zambia’s debt if it were paid in full.