Sovereign Debt Contract Capacity Act

Floor Speech

Mr. Speaker, I rise in strong support of H.R. 4111, the Sovereign Debt Contract Capacity Act, an important piece of legislation sponsored by our chairwoman and cosponsored by our committee's lead Republican.

China has now become the world's largest official creditor, but the details of its lending remain notoriously opaque.

At a hearing in May, the Financial Services Committee examined how China has been using strict confidentiality arrangements, cross-default provisions, and other tools to hide the details of its loans and potentially influence borrowers' domestic and foreign policies.

A recent analysis by the research group AidData has also shown that 42 countries now have public debt exposure to China in excess of 10 percent of their GDP, which is largely hidden from conventional reporting to the World Bank.

H.R. 4111 would address this problem by supporting technical assistance from the International Monetary Fund to help developing countries better assess these debt contracts.

This legislation builds on a bipartisan law authored by our colleague, Congressman Hill from Arkansas, that requires the Treasury Department to push for greater Chinese debt transparency at the international financial institutions.

Together, these two bills are a clear statement that our committee wants the Treasury Department to prioritize the threat of China's hidden debt and give countries the necessary technical assistance to push back on Beijing.

H.R. 4111 is especially timely since the IMF is confronting serious difficulties carrying out new programs since China has been so slow negotiating its loans to IMF borrowers.

If the International Monetary Fund can't accurately assess borrowers' liabilities to Beijing, it will have trouble providing its own financing. In other words, China's opaque lending practices are not just a threat to borrowing countries; it puts at risk the operations of the IMF, World Bank, and other multilateral lenders. This is unacceptable.

I commend the chairwoman for sponsoring this legislation and hope that our committee can continue to work in such a bipartisan manner to address China's exploitation of countries around the world.

Mr. Speaker, I urge my colleagues to support H.R. 4111, and I reserve the balance of my time.

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Mrs. WAGNER. Mr. Speaker, I thank the chairwoman, again, for her strong legislation. I would urge all my colleagues to support H.R. 4111, the Sovereign Debt Contract Capacity Act, and I yield back the balance of my time.

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