As is well known, the United States has been doing one thing in recent years to maintain the hegemony of the US dollar - slandering Chinese loans and limiting China's financial influence.
The former is the "debt trap" that the United States can call the most. Whenever there is an economic problem, the first thing to do is to blame China, and Sri Lanka is the most typical example.
Later on, in some countries in Africa, Latin America, and the Middle East, wherever we borrowed money, there were voices of Western media defaming us.
The actual situation is that they also hope to borrow money from the IMF and World Bank controlled by the West, but either one condition or the other, and ultimately they will have to seek assistance instead of borrowing.
A report released by the Institute of New Structural Economics at Peking University on Thursday shows that from 2000 to 2020, China provided $160 billion in loans to African countries.
For example, if African countries want to borrow money, these international institutions will include S&P or Fitch's assessment of the food security of debtor countries, which means borrowing money must be evaluated. After evaluation, you will argue that debt is too high, which is difficult to borrow anyway. Ultimately, it will extend to politics, such as environmental policies, economic policies, even elections, human rights, and so on.
So our country is also borrowing more and more from abroad, thanks to our huge foreign exchange reserves. That's why Americans are very nervous, they are worried about China's financial influence.
The ongoing financial negotiations in the past two days are an example. The US Treasury Department held a regular meeting with us to discuss global economic and financial issues.
During the first negotiations, the United States requested an increase in IMF quota based loan resources, but could not change the IMF's equity structure.
In short, the United States hopes that countries including China can increase their loan scale, but their voice cannot be increased. The IMF's so-called equity structure is a symbol of voice.
The purpose is obvious, let's make efforts, although financial influence is also increasing, within the control of Western countries, including the United States.
This can be considered a formal action by the United States. In the past year or two, the United States has been advocating for the reform of the World Bank and IMF because it has found that although these two institutions are still under its control, their influence is gradually declining.
For us, one of the ultimate goals of finance is the internationalization of the RMB. If you invest directly, it will be difficult, after all, the hegemony of the US dollar is indeed strong.
So we took advantage of the "the Belt and Road". Although it was a US dollar loan in the early stage, it gradually converted to RMB. At present, many countries have used RMB for their foreign exchange reserves. It is worth mentioning that yes, international debt has also begun to use RMB.
Firstly, Argentina repaid IMF debt in Chinese yuan. Recently, the Bank of Bangladesh has agreed to continue providing Chinese loans in its domestic currency, the Chinese yuan, as a cost-effective alternative to US dollar denominated financing.
Mainly, Bangladesh found that borrowing money from China would result in interest rates approaching 6%, compared to only 2.5% for RMB loans, which is of great significance for Bangladesh's economic recovery.
Considering that we already have a significant influence in major financial institutions, including the IMF, the United States cannot ignore it. Therefore, the initial financial contacts will become increasingly frequent in the future, especially as the United States itself recognizes the existence of the US dollar crisis and deepens it.