Global miner BHP’s Chief Andrew Mackenzie has downplayed rising concerns China’s international infrastructure program is being used to take advantage of smaller nations through debt traps.
Speaking at the China Development Forum Economic Summit in Beijing, China, on Saturday, Mr Mackenzie said China’s Belt and Road Infrastructure (BRI) program is such a massive development it is bound to draw criticism.
“What I’d like to do is to downplay some of the geopolitical issues that get associated with this initiative and raise up the economic importance of this agenda,” Mr Mackenzie said.
“It can achieve greater cross-border co-operation, and I think, obviate some of the protectionist forces that now threaten free-flow of trade and investment.
“Inevitably, a project of this scale, its complexity, its risk, is going to suffer the odd setback and criticism but I have a sense that China, as the main architect of the Belt and Road along with many of the other participants, are learning from this as they translate it into reality.”
China’s Belt and Road Infrastructure program is a $US1 trillion ($1.4 trillion) initiative to build hundreds of major infrastructure projects such as ports and rail in 70 or more countries.
It has been dubbed a new ‘silk road’, as it creates more overland and maritime trade routes to strengthen China’s economy and help it develop a wider sphere of influence.
The program has drawn criticism that it targets poorer nations, offering countries loans that are difficult to pay back and creating debt traps that leave these countries at China’s mercy.
When countries are unable to pay back the loans China demands other concessions as a form of debt relief.
When Sri Lanka was unable to pay back $1 billion in debt for a new port, it handed control of the port to China on a 99-year lease.
Closer to home, Papua New Guinea, which signed up to the BRI in June last year, already owes China nearly $2 billion from concessional loans, almost a quarter of the nation’s debt.
Fiji owes China around half a billion dollars.
Other Australian resources chiefs have also warned that China’s growing influence in the Pacific through the initiative should be a ‘wake up call’ for Australia.
Mr Mackenzie acknowledged the Chinese program had occasionally failed to work cooperatively with nations in which it had invested.
“Host countries are going to have to have a say in projects and to ensure that they will meet the immediate and long-term needs of its people,” he said.
“They’re going to require a long-term sustainable form of project financing. They’ll be required to be able to offset some of the risks of debt traps.”
However, he added that the BRI is still a “win-win” for countries involved.
Mr Mackenzie did not comment on China’s apparent restrictions on imports of Australian coal, which have forced Australian coal ships to divert to other countries as the slow down on these imports intensifies.