OBOR often leaves countries with 'excessive debt' and 'poor-quality' projects: US

China's ambitious 'One Belt, One Road' (OBOR) initiative often leaves countries with "excessive debt" and "poor-quality" projects, the Trump Administration told lawmakers, asserting that the US is seeking debt transparency from the Chinese.

Treasury Secretary Steven Mnuchin has pushed forward an initiative on debt transparency that will, in the near term, significantly increase public disclosure and broaden the existing definition of international debt beyond traditional bonds and loans, David Malpass Under Secretary of Treasury for International Affairs told lawmakers during a Congressional hearing Wednesday.

"This will help push back on China's over-lending to fragile developing nations, including those with weak governance," he said during a hearing on 'Evaluating the Effectiveness of the International Financial Institutions' by the House Financial Services Committee.

"We engaged repeatedly with China on our trade and investment concerns and the problems caused by their 'One Belt, One Road' initiative, which often leaves countries with excessive debt and poor-quality projects," he said.

If countries default on these debts, China often gains influence over the host government and may take ownership of the underlying assets, he said.

As such the US has built a common awareness of these concerns in the G7 and G-20.

"In lending, China often fails to adhere to international standards in areas such as anti-corruption, export credits, and finding coordinated and sustainable solutions to payment difficulties, such as those sought in the Paris Club," he said.

In the last two years, he said, the US has increased its efforts to sensitising the world on this and having a shared discussion with other G7 countries on how they are going to deal with this where all countries are doing business around the world, and yet the second biggest country in the world is not using the same principles.

"That is discussed and it's actually discussed also in the G20, which includes China," Malpass said. "It is interesting to have a discussion like this with China right there, and China often recognises that it does have things that it needs to change in this regard as well."