Beijing tells US to fix own debt problems after Yellen calls China a barrier to solving Zambia crisis

Chinese embassy in Zambia responds to US Treasury secretary’s comment that progress from China on a debt deal with Zambia had taken too long
Yellen says she discussed Zambia debt with Chinese Vice-Premier Liu He in Davos last week and ‘our talks were constructive’

US-China relations

Teddy Ng

Published: 8:00pm, 24 Jan 2023

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Beijing has called on the United States to clear up its own debt issues before making accusations about Chinese lending in Africa, after US Treasury Secretary Janet Yellen said China was a “barrier” to ending Zambia’s debt crisis.

A statement released by the Chinese embassy in Zambia on Tuesday said the best prospect for debt issues outside America would be “the US Treasury Department solving the US’ own domestic debt problem”.

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“In fact, the biggest contribution that the US can make to the debt issues outside the country is to act on responsible monetary policies, cope with its own debt problem and stop sabotaging other sovereign countries’ active efforts to solve their debt issues,” the embassy statement said.

“Even if the US one day solves its debt problem, it is not qualified to make groundless accusations against, or press for, other countries out of selfish interests, because it cannot at all alleviate [the] US’ tremendous responsibility for the reason of the world debt issues, let alone the fact the US’ domestic debt problem is now worsening the world’s economic and financial stability.”

Yellen is on a 10-day trip to Africa, visiting three countries. Speaking in the Zambian capital Lusaka on Monday, she said progress from China on a debt deal with Zambia had “taken far too long already to resolve”.

“I know the Chinese have been a barrier to concluding the negotiations,” Yellen said.

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She added that she had raised the issue with Chinese Vice-Premier Liu He on the sidelines of the World Economic Forum in Davos last week, with encouraging results.

“I specifically raised the issue with Zambia [with Chinese officials] and asked for their cooperation in trying to reach a speedy resolution. And our talks were constructive,” Yellen said.

Zambian Minister of Finance Situmbeko Musokotwane sits at the State House during US Treasury Secretary Janet Yellen’s visit, in Lusaka, Zambia, on Monday. Photo: Reuters

She told Zambian Finance Minister Situmbeko Musokotwane that the timely conclusion of Zambia’s debt treatment was a top priority for the US Treasury.

“We will continue to press for all official bilateral and private-sector creditors to meaningfully participate in debt relief for Zambia, especially China,” she said.

China’s lending in Africa has been under scrutiny, with nations including the US blaming China for excessive lending leading to a debt trap.

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China is Zambia’s largest bilateral creditor, accounting for 75 per cent of Zambia’s debts to other nations, including France and India. Including commercial lending, Zambian government data shows it owed more than a third of its US$17.27 billion external debt to Chinese lenders by the end of 2021.

Beijing said it was active in relieving Zambia’s debt burden through the G20 framework.

“China’s efforts have made some positive progress. We look forward to [the] US’ constructive role in the process,” the Chinese embassy statement said.

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Citing Yellen’s remarks in a letter to US congressional leaders on January 13, the statement said the US had reached its debt ceiling and was creating a burden on the world’s economy.

“We do hope Ms Yellen can manage to prevent the US from defaulting on its obligations and protect the country’s credit,” it said.

Additional reporting by Reuters