[Congressional Record Volume 166, Number 41 (Monday, March 2, 2020)]
[House]
[Pages H1429-H1430]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENSURING CHINESE DEBT TRANSPARENCY ACT OF 2020
Mr. SAN NICOLAS. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 5932) to ensure greater transparency about the terms and
conditions of financing provided by China to member states of the
international financial institutions, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5932
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ensuring Chinese Debt
Transparency Act of 2020''.
SEC. 2. ENSURING CHINESE DEBT TRANSPARENCY.
(a) United States Policy at the International Financial
Institutions.--The Secretary of the Treasury shall instruct
the United States Executive Director at each international
financial institution (as defined in section 1701(c)(2) of
the International Financial Institutions Act) that it is the
policy of the United States to use the voice and vote of the
United States at the respective institution to seek to secure
greater transparency with respect to the terms and conditions
of financing provided by the government of the People's
Republic of China to any member state of the respective
institution that is a recipient of financing from the
institution, consistent with the rules and principles of the
Paris Club.
(b) Report Required.--The Chairman of the National Advisory
Council on International Monetary and Financial Policies
shall include in the annual report required by section 1701
of the International Financial Institutions Act--
(1) a description of progress made toward advancing the
policy described in subsection (a) of this section; and
(2) a discussion of financing provided by entities owned or
controlled by the government of the People's Republic of
China to the member states of international financial
institutions that receive financing from the international
financial institutions, including any efforts or
recommendations by the Chairman to seek greater transparency
with respect to the former financing.
(c) Sunset.--Subsections (a) and (b) of this section shall
have no force or effect after the earlier of--
(1) the date that is 7 years after the date of the
enactment of this Act; or
(2) 30 days after the date that the Secretary reports to
the Committee on Financial Services of the House of
Representatives and the Committee on Foreign Relations of the
Senate that the People's Republic of China is in substantial
compliance with the rules and principles of the Paris Club.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Guam (Mr. San Nicolas) and the gentleman from Arkansas (Mr. Hill) each
will control 20 minutes.
The Chair recognizes the gentleman from Guam.
General Leave
Mr. SAN NICOLAS. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks on this legislation and to insert extraneous material
thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Guam?
There was no objection.
Mr. SAN NICOLAS. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I very much support H.R. 5932, the Ensuring Chinese Debt
Transparency Act of 2020, which seeks to reinforce U.S. policy at the
World Bank, the International Monetary Fund, and the regional
development banks to press for disclosure of the amount and terms of
China's bilateral lending operations abroad.
According to the International Monetary Fund, opaque loans from
China's many lending institutions, especially those associated with
China's Belt and Road Initiative are not only putting many emerging
market and developing countries at risk of debt distress, but also
complicate the IMF's ability to
[[Page H1430]]
monitor domestic, regional, and global financial risks associated with
this debt.
While the ability to accurately identify the amount and terms of
Chinese lending in developing countries is essential to better debt
risk management, surveillance work, and asset risk pricing, it is
important to understand that greater transparency itself is only a
starting point.
In order to help low-income, emerging market, and fragile and
conflict-affected states meet development goals while maintaining debt
sustainability, the United States should be increasing its commitments
to the multilateral development banks to offer these countries better
options than China does, to provide additional financing on
concessional terms of which China does very little.
Let me add that one argument for China's ongoing borrowing from the
World Bank is that it allows a broader public global good to be
imported into the Chinese system, things like international
environmental and societal standards, high standards of transparency
and open procurement processes, strong governance programs, and respect
for the importance of global economic cooperation.
However, there is very little evidence that World Bank lending to
China has had any such effect on Chinese behavior with respect to its
own development financing abroad, and this is a serious problem.
H.R. 5932 helps us to address this problem. Mr. Speaker, I reserve
the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may
consume.
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. Speaker, I reserve the balance of my time.
Mr. SAN NICOLAS. Mr. Speaker, I am prepared to close. I reserve the
balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself 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. Mr. Speaker, I yield myself the balance of my time.
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.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Guam (Mr. San Nicolas) that the House suspend the rules
and pass the bill, H.R. 5932, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. HILL of Arkansas. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________