Germany’s finance minister on Thursday welcomed a signal from China that it may drop a demand for multilateral banks to be involved in debt restructuring for poorer countries, which would remove a key roadblock to debt relief.
Speaking on a visit to Washington for the International Monetary Fund and World Bank spring meetings, Christian Lindner said that China appears to “finally accept its responsibility as the major creditor of low-income countries.”
China, which is attending the meetings in person for the first time in three years, has indicated it will drop its demand for multilateral development banks to share losses alongside other creditors in sovereign debt restructurings for poor nations, a source told Reuters.
“The German government sees this as progress and we welcome it,” Lindner said.
China is a difficult partner to talk to but we need China at the table for the solution of debt problems, because otherwise we won’t see any progress
China is by far the largest creditor for many highly indebted countries in Africa and Asia, and has been repeatedly pressed to make concessions to speed debt restructuring.
Regarding trade relations with China, the German finance minister said that diversification was necessary to avoid risks, but not decoupling.
“Decoupling, even in the short term, cannot be in the interest of the German economy and the fragmentation of the global economy as a whole cannot be in anyone’s interest,” Lindner said.
French President Emmanuel Macron provoked a backlash in the United States and Europe when he called on the European Union to reduce dependence on the U.S.
“It is clear to me that the U.S. and the EU are close allies and partners in their values,” Lindner said.