NADI, FIJI – Finance Minister Taro Aso called on the Asian Development Bank on Saturday to scale back easy money to countries like China that have developed to the point of no longer needing financial aid.
“ADB should hold substantive discussions on a concrete path toward graduation while prioritizing its assistance in areas conducive to graduation,” Aso said in a speech at the bank’s annual conference.
His remarks were a dig at China, which has continued to receive low-interest loans even as it has grown into the world’s second-largest economy and its income levels have risen. China accounted for 12 percent of ADB’s contracts in 2018, second only to India.
Critics have also pointed to China’s large amount of lending to developing economies through its “Belt and Road” infrastructure initiative which has saddled some countries with significant debt. In the speech in the Fiji resort city of Nadi, Aso said, “In order to make effective use of its limited resources, ADB should prioritize assistance to low-income and vulnerable countries, including small island states.”
The World Bank, whose largest contributor is the United States, is set to cut back its loans to China, while Japan ended its official development assistance to the country in March.
In an interview with media outlets last month, ADB President Takehiko Nakao said his bank is not planning to downsize the amount of lending to China, saying that it will focus on environmentally friendly projects and those that will positively impact neighboring countries.
He also stressed some merits of loans to China, such as keeping a constructive relationship.
Yet the issue is likely to come up again at a meeting of Group of 20 finance leaders to be held in the city of Fukuoka in June.