IMF’s Lagarde warns China on ‘Belt and Road’ debt

The International Monetary Fund warned China yesterday of the risk posed by unnecessary infrastructure projects in countries that already face significant debt issues, the second time this week that the organization has cautioned China on debt issues, the Financial Times reports.

IMF Managing Director Christine Lagarde told Beijing that “ventures can also lead to a problematic increase in debt, potentially limiting other spending as debt service rises, and creating balance of payments challenges.”

Lagarde also announced the IMF’s first public sign of support for China’s Belt and Road Initiative – the China-IMF Capacity Development Center, aimed at training Chinese officials for foreign work, which opened last month.

On Tuesday, the IMF published a report warning China of the continued threat of capital flowing to unprofitable “zombie” firms in certain sectors of its economy.