Good morning. My name is chairmans mark. Im a senior fellow with the Geoeconomics Center of Atlantic Council. I would like to welcome you to our next session where we are going to dig into development and finance, chinas lending, aid, its investments and what is being called the global south. Im going to use the moderators privilege and refer to low income and middle Income Countries. That seems to be a more neutral term than what we were using before. Real quickly, just to introduce the topic. We found a great deal today about a lot of the big picture aspects of chinas interaction with the developing world. And to think what were going to try to do here is sort of dig into the lifeblood of this interaction, which is money. The lending investment and a that china has offered to both low income and middle Income Countries over the past decade amounts to a vast sum, well over a trillion dollars. Based on a data statistics the commitment or even larger than that. Theres a lot of issues that now revolve around the flow of capital out of china to these countries come and many of you are aware that the linda in particular is contributed to a debt problem in many countries now that has to be addressed, and even presentbe a potentially serious risk to chinese lenders at a moment of economic downturn in china. So what will get into this now and what i want to do is really quickly introduce our speakers and then well turn to questions. We have two speakers today who are joining as remotely. First from new delhi is veda vaidyanathan, an associate fellow in Foreign Policy and security at the center for social ander economic progress. Xi is also affiliated with harvard universities asia center, and the institute of chinese studies of new delhi. Joining us from copenhagen is an alonso Council Colleague who is with the global china hub, also a senior fellow and choose direct just finance interest, a Nongovernment Organization focus on issues related to Development Finance. We are having some issues today and so xi will be with us invoice and not by picture. Im sure that will not interfere with our participation in the slightest. Now, sitting here at the table at the center is Samantha Custer who is director of policy analysis at aiddata which is a a research lab at william and mary College Global research institute. Sams team at aiddata examines form policy and Development Issues and is well known, very well known for his work on chinas lending. And last and certainly not least, to my left of the table, is a senior policy fellow at the center for global 2000 w. Gyude moore here in washington, a lecture university of chicagos Harris School for Public Policy and a former senior official in library under president Ellen Johnson sirleaf. Welcome to all of you. Why dont we get right into the question, going to focus in on the debt issue for the moment. I would like to start with veda please. Can you talk to us a bit about chinas approach to Development Aid in lower and middle Income Countries, how it might differ from the practices of traditional western donors, multilateral institutions and what you see are some of the key principles guiding chinas policy . First off, very quickly, its wonderful to be here and thank you so muc for having me. Imacs are going to use the shoulder because its easy to say at this point. Back. I think there are a bunch of factors that chinese lending to the global south especially countries in africa region that a study closely, one of them would be a number and the sheer types of lenders they are. I think would be chinaafrica they came out of the study of years ago that said in early 2000 there were three chinese lenders and nowow that i think 9 or so. So i think the sheer number of other chinese, the kind of lenders, the kind of terms that they lend on, all that is incredibly diverse. Influence te see. For instance, one example is the Technology Demonstration center. The idea of technology not just transfer technology, but skills it is a motive where scientists work very closely where Sciences Scientists from Different Countries are host. One of their countries, the one in zambia, where they were working closely with professors. The construction the money for the construction came from china, some of the labs and some of the equipment were locally sourced. A lot of the Community Farmers came to the center, but the impact of the center itself and what it did is a different story. Similarly, there is capacity building. I think a few members talked about highlevel educational visits, sending fuhrer cats bureaucrats to other parts of the country. To give you another perspective, i was in the province in zombie a zambia and there was a tiny vocational center. A lot of flyers and a lot of conversations about how they could send technicians from these tiny universities to places in china. The idea of really bringing a nuanced perspective to the society of this capacity, but it sets it apart. Chinese lending is not uniforms. I think five or six countries in africa account for five 5 or 6 of lending. These are things that set chinese lending apart. This is one of the reasons why china is seen as an alternative to a lot of the countries in the global south and one of the reasons china has been maybe not winning, its also because of this. Sam, lets turn to you and take a Bigger Picture view of the debt issue. Can you talk about how your understanding of how china manages its lending practices and debt relations with countries and what are some of the implications of chinas debt diplomacy to the recipient countries economic stability and sovereignty . I think i will start by building off of the great answer. When i think about one of the differences and uniqueness of what china offers to the world, i go to my fivepoint cheat sheet. One is the scale of what we are talking about. We are talking about 1. 3 trillion in financing that far outstrips most other donors on the market speed. We are talking about things like bigticket Infrastructure Projects, a typical chinese finance Infrastructure Projects is two and a half times as much as the competitor. Focus, i think it was alluded to, traditionally when you think about the chronic infrastructure deficits that the global south is facing, when you are looking at where to finance that, china used to be one of the only funders in town. Terms are important. China i have a colic that likes to call china a banker and not a benefactor. When you look at how china is doing this, its debt instruments such as loans approaching market rates. Its a little bit different than what we see. Transparency was challenging when it comes to debt conversations, unlike an actor like the u. S. Or the u. K. That i report its terms and its products to the ocd, how is china managing all of this portfolio. Its been interesting to watch. I think china has been strategic and opportunistic but it didnt have a master plan. You think back to 2013, it positioned itself as a go to infrastructure lender and it was critical because it bankrolled Infrastructure Projects at scale. What we see 10 years in is that we are dealing with the unintended repercussions of these choices. We now see that 55 of the loans that china has been providing for the global south are now entering into repayment. By 2030, that will be 75 . The global south has accumulated a large debt burden, 2. 6 billion including principal and interest. Thats a lot of money to repay. And we are seeing growing pains in china is trying to adapt on the fly. You see them start to act and to deal with the fact that they have become not only the largest infrastructure banker but they are the largest debt collector in the world. You are seeing interesting things like the inclusion of collateral. 75 of projects include things like escrow accounts. If you are engaging in risky markets, you need to park money somewhere so you can access this if they are slow to repay. Penalties are sharper if people are late on repayment. You are looking at emergency lender kick in. How do you increase the liquidity struggling to repay . You are seeing professionalization. 39 different actors, we are counting over 700. There is the shift to commercial entities. These are commercial state owned banks in china, but also western commercial banks, like Standard Chartered and they are cofinancing these loans. Different things to navigate these risks. Restructuring is now becoming a part of the debt picture. Do you see chinas efforts to restructure as beginning to damage its relations with recipient countries. Weve heard various reports about debt trap and whether or not thats an accurate description of chinas policy, its part of the narrative. How do you see this playing out . I hate the term i hate the term debt trap diplomacy because i think it has the unfortunate coincidence being wrong. But aside from that i think it assumes countries lack agency. It takes two people to sign up to these agreements. But i think youre right, like there is this challenge, what happens on country starts feeling the burn and having to repay what happens. Similar to what i said before, china is fun middle a banker with this. What you dont see often is outright im writing off these loans, im forgiving them. You see it sporadically. Every once and while they are likely old loans that are basically bad loans, or there with the ones that were early on that were like 0 or very low concession elda. Theres kind of not too mucha burden for china to write off. Thats not whats happening in both cases. Youre seeing a willingness to restructure and deferred, to push out when these loans are due, to restructure the financing terms oflo these thin, thats far more common. But what you see in the demand side in global south countries, theres a variety of reactions. On one hand theres caution. You are seeing an uptick in projects that are being suspended or canceled. There areei about 94 of them now and i think when you look at the details of most of these things its often domestic governance that are starting to pull back. Thats an Early Warning signal of maybe nothing of this is a heyday is not as high as it used to be. I think also use Approval Ratings for china kind of a course measure going down globally because of some other high profile difficulty these countries are having. Heres the challenge, its not all bad news for all of pushback from countries. Countries are still signed agreements. I saw one from sri lanka the other day, country that had a major embarrassing, bessie default. That only because a child the party because of china and is still signed on to new agreements with china. China still the number one preferred infrastructure partner in the global south. We as leaders of 120 countries, 40 said china is our preferred partner. In africa it is even higher. Theres a willingness that you have to be careful wariness but i think china still a nepartner. Lets take this a little further, sort of the perspective of recipient countries at this point. How do they perceive recipient countries, how did they proceed chinas development assistance, Lending Finance . What factors do you think are shaping their the decisioe with china on developments and initiatives . And do they see clear benefits to engaging with china like this . Li again, its a pleasure to be here and thank you. I think kenyas experience over the last seven or ten days is pretty instructive. For the last three years most emerging economies, most of the ones in africa, were effectively shutting out the international markets. They couldnt go to the markets to issue debt. Of which can you actually did over the last say seven to ten days was 10. 5 . So the sovereign had to borrow. Thats how steep it is. There was a study that shows country the issue debt at 10. 5 come for the for the 60 would eventually default on that. Thats how bad it is. From china wasnt concessional. It was close to market weight but it wasnt as if african countries had these options. The number of options werent that much. And what it was about this relationship is a part of what we are seeing is a reflection of african interest and demand. Im just speaking from the african side. In 19752002, it was declining at 8. 9 a year. East asia was almost 30 . This is the complex when the chinese show up, a person projects at a certain margin, 500 million ord more so there s an understanding but what options are there . This is the population growing fast which means since the 1990s, they said 45 economies depend on commodity exports 2 of the revenue. Its an added value for what is exported and it needs africa is spending less and less to pay for its infrastructure and about social services and china is the only one edible enough this risk and this is the part they will deal with. Theres not an absence of understanding the implications, is just a few are going to govern, i have this thing where i say that the closer it is to china but democracy means campaigning we promise we are going tode deliver across the structure so you turn to the one thats most likely to provide infrastructure metaphors for we are seeing 90s funding across the developing world drop sharp because of the problems emerging and the problems the chinese economy is facing. I want to come back in a moment but first ild would like to brig her in to this discussion, i think it is useful to look beyond the economic and plantwide northlands a bit and impact the Chinese Foreign ads on issues related to governance and rule of law and particularly the infrastructure landing. I know you work on this, could you talk about the extent to which chinas finance conditionality on loans, increased amount involvement as a result of all of this financial support, policies of government and how it can affect the recipient governments interacting with their own citizens please. Thank you for having me here. I want to take a moment to offer another view and what we are seeing in recipient countries. The work extensively with citizens and unfortunately have to play the devils advocate here in the notion that Chinese Investments fulfill Development Needs are observation monitoring. What we have seen is the vastness of chinas financing little social economic or environmental conditions attached to it and like lending it leads to changing legislation. Governed human rigs protection in order to facilitate greater capital flows from china. Even as they have faulted demands for greater transparency. The impacts are multifaceted in terms of the scale. I think as it was put, chinas Infrastructure Project has been put to scale. The majority are largescale Infrastructure Projects that ultimately, first and foremost, benefited export demands and needs of Chinese Companies, many of which have been blacklisted by organizations for a variety of reasons. So the question really is, against this backdrop of context , and particularly the risks associated with that type of context, countries have had devastating impacts, their own climate environmental rights. I think listening to todays discussion, there has been a lot of backandforth on countries narratives about Chinese Investments and benefits. But ultimately, i think there are a couple of points where we are already concerned with transparency. I think in previous sessions it eliminated a sense of agency in demand from host countries with Chinese Investments. The question is, have citizens been given access to providing input, and putting forward their own demand. Do citizens really want bridging projects, corridors that actually do not provide any benefits to them. Secondly, we are also witnessing Information Transparency across several countries in southeast asia, in Southeast Europe and central europe, where countries circumvent their only way in preventing citizens and having information that are very important for ensuring those projects. Secondly, where is the public in the discussion . Lets not forget the particular chinese characteristics, which are basically denying the public which is a patient in such discussions. Unfortunately, as a result of that, we are also seeing how receiving countries are increasingly developing and employing a difficult approach in miniaturizing those projects, in order to protect both Chinese Companies and the host most importantly, we talk about citizens. Which are the foundation of every nation. Hopefully still. Very few of their rights are recognized. There is increasing criminalization and clamping down on citizens and civil organizations. But countries where china actually is a leading, or one of the largest fbi actors fdi actors. Those are the reflections i can offer. Can we follow up on the point you made at the end about the impact on the citizenry . What issues and options does that present to Civil Society organizations on the ground in these countries in the face of these issues . That is to you, wawa. This question requires days and months. Unfortunately, over the past decade, since the socalled strategy which transformed into this noncohesive ideation. We have seen increasing strengthening in concrete terms and out of an abundance of caution, i will not name the countries and specific actors and citizens negatively affected by chinese lending investments. The majority experienced increasing reprisals for even seeking the most minimum information relating to the nature of the project, concerning environmental impacts, as well as social impacts ranging from resettlement, involuntary rehousing. Again, we are seeing de