Ensuring Chinese Debt Transparency Act of 2020
Floor Speech
Mr. Speaker, I rise today in support of the legislation, H.R. 5932, which I introduced recently, and I was fortunate to have the Speaker's assistance on this, my friend from Missouri, Mr. Cleaver, in designing this legislation.
It is just one issue that relates to a complex set of issues around China's access to the World Bank and China's engagement in the world as a creditor.
But H.R. 5932, Ensuring Chinese Debt Transparency Act, would require the Secretary of the Treasury to instruct the U.S. executive director at each of the international financial institutions that it is U.S. policy to ensure greater transparency in Chinese Government lending to countries that are also beneficiaries of those international financial institutions.
Specifically, this bill would require the Secretary to report annually to Congress on the progress in advancing this policy, and secondly, lending to foreign countries by entities owned or controlled by the Chinese Government.
As we know, the international financial institutions include the International Monetary Fund, the IMF, the World Bank, and the regional development banks. The IMF lends to foreign countries in order to resolve balance-of-payments crises, while the development banks finance projects with the long-term aim of alleviating poverty.
With the growth of China's global presence, there is concern that the developing nations that borrow from Beijing will become overburdened, forcing them to be rescued by the IMF or complicating the development banks' ability to properly underwrite loans for new projects.
Specifically, the Belt and Road Initiative is of significant concern. The Chinese Belt and Road Initiative is a global development strategy adopted by the Chinese Government in 2013. It involves infrastructure development and investments in nearly 70 countries and international organizations in Asia, Europe, and in Africa.
To date, according to Morgan Stanley's estimates, the Belt and Road Initiative has committed more than $200 billion with estimates that China may invest up to $1.3 trillion by 2027. Other estimates have the current number closer to $400 billion. Either number dwarfs the post- World War II Marshall Plan, which, measured in today's dollars, would be $130 billion.
However, unlike the Marshall Plan, Belt and Road Initiative financing can make underwriting assistance difficult or even unworkable for developing countries as the initiative has opaque financing terms. China simply doesn't report on this lending in any systematic way, and there is no evidence that China is adopting international transparency standards from the multilateral development banks or engages in best practices to prevent debt traps, corruption, or poor construction outcomes.
China needs to be held accountable to ensure that it is not taking advantage of vulnerable economies in these countries. In my view, the World Bank and the IMF must know the terms and conditions of opaque Chinese lending, what those entail, when they are considering a sovereign loan to a country that goes to the World Bank or the IMF for assistance.
On a trip to the Republic of Congo back in 2017, I witnessed this firsthand when I saw the burdens and impact of Chinese lending on that oil-based economy. Now, the Republic of Congo finds itself in the hands of the IMF in negotiating with them for a payments loan.
This legislation will contribute to that overall accountability by seeking to secure greater transparency consistent with the principles of the Paris Club, a group of global creditors, including the United States, who find workable solutions for nations currently in debt.
In theory, many of the underlying policies in this legislation should already be practiced; however, due to political insensitivities, inertia, and other concerns, that doesn't always happen. This legislation will underscore the United States' leadership and help develop a global multilateral effort to ensure more scrutiny for China. As China becomes a major creditor nation, it should be held to a high standard.
Mr. SAN NICOLAS. Mr. Speaker, I am prepared to close. I reserve the balance of my time.
In conclusion, I would say that this is the way to build a partnership between the multilateral countries of the world that support the World Bank and the IMF and have China have more scrutiny on their opaque terms and conditions, which in turn should allow better outcomes for our developing nations around the world, less chance of falling into a debt trap.
Mr. Speaker, I urge my colleagues to support this legislation. I thank my friend from Missouri for his assistance and my friend from Guam for managing the bill. I yield back the balance of my time.
Mr. SAN NICOLAS.
The fact that China continues to borrow from the World Bank affords us an opportunity to expect much more from China in return, including an insistence on transparency in China's bilateral financing operations, greater adherence by China to anticorruption and export credit international standards, and finding coordinated and sustainable solutions to countries experiencing balance of payment difficulties.
I urge my colleagues to support this legislation, which underscores that far greater transparency is the first essential step China must take if it is to be a responsible member of the global financial community.
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Mr. HILL of Arkansas. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
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