China playing positive role in expansion of development lending in Asia Pacific

China has played a positive role in promoting the development lending in the Asia Pacific region over the recent years as the country is pushing forward its ambitious Belt and Road initiative, according to a US economist.

In a recent interview with the Sino-US.com, Miles Kahler, senior fellow for global governance at the Council on Foreign Relations in Washington and distinguished professor at American University's School of International Service, said that the expansion of the development lending in the Asia Pacific region was of great significance to infrastructure construction and protection of the environment.

The China-led Asian Infrastructure Investment Bank (AIIB) has joined a list of global monetary organizations such as the World Bank and the Asian Development Bank to become a key provider of development lending, which is caused by the implementation of the Belt and Road initiative which focuses on infrastructure construction and triggers more demand for development lending, said Kahler.

However, Kahler was concerned about the prospect of development lending in the Asia Pacific region, saying that China, the key lender in the region, might face some challenges.

The US economist doubted the ability of the AIIB to finance a variety of projects, as different countries in the region would compete for more lending leading to contradictions among them. What's more, the lack of policy-based lending by the AIIB would cause complaints from the dog-poor countries, which would intensify the existing geopolitical tensions, said Kahler, citing the Indian aloofness about the Belt and Road initiative.

Another challenge is from other lenders. The participation of more lenders in offering of development loans will bring differences in ideological foundations and lending standards, according to Kahler.

Worse still, China's dominant position in offering development loans in the region might incur other countries' fears over monopoly, especially at a time when the US is retreating in lending globally, said the US economist, adding that some related countries still see the Belt and Road initiative as a tool that China can use to expand its economic and political influence in the region.

 


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