China is massive in every way. Not only is it the world's second-largest economy, but it also spearheads both the continent-spanning Belt and Road infrastructure push and the Asian Infrastructure Investment Bank. It is time for the country to act in a responsible manner befitting its status as a great power when it comes to borrowing from international lenders and disclosing information on its overseas loans.
The Paris Club is a group of major creditor nations -- including Japan, the U.S. and European countries -- that meets regularly in Paris. It was created in the 1950s, driven initially by the need to discuss a debt crisis in Argentina. The club has since expanded to include such other countries as South Korea and Russia. The meetings offer a crucial opportunity for creditor nations to exchange information about debtor nations, and for both sides to negotiate rescheduling or other of payments should debt crises or other events arise.
Though China attends certain Paris Club meetings as an ad hoc participant, it is not a formal member, and as such is not required to disclose its own external loan claims or meet other club obligations.
But the need is growing ever more urgent for Beijing to be transparent about its external development financing initiatives. There is mounting concern within the international community about Chinese moves to ensnare poorer Asian and African nations in its "debt traps" through aggressive lending that buries them under mountains of debt and eventually leaves them under Beijing's economic control. If China is to live up to its responsibilities as a creditor nation, it should become a full-fledged member of the Paris Club as soon as possible.
Furthermore, now that China can afford to extend financial support to other countries, it should wean itself off borrowing from international development institutions such as the World Bank and the Asian Development Bank.
China's outstanding debt with the World Bank stood at about $14 billion at the end of June 2018, making it the fourth-largest debtor after Indonesia, Brazil and Mexico. Loan approvals for China for fiscal 2018 totaled roughly $1.8 billion, the fourth highest after India, Egypt and Indonesia.
The World Bank and the ADB have a number of yardsticks for gauging when it is time for a recipient nation to break free of their financial support, such as per capita gross national income, the ability to raise funds from international financial markets, and the capabilities of local economic planning and development institutions. China has already met the criteria for "graduating" from being a recipient. But because countries must, in principle, actively opt out of being a lending recipient, nothing will change unless China decides it wants to shed its "borrower" status.
There is still a yawning rich-poor divide between China's coastal and inland regions. But given that China has grown to the extent that it can vie with America for global dominance, Beijing can no longer keep playing the "developing nation" card when it thinks that is more convenient.
From the days of its postwar reconstruction to its period of high economic growth, Japan borrowed funds from the World Bank to build such infrastructure as power stations, railways and highways. But it stopped taking fresh loans in 1966. China should likewise fulfill its responsibility as a superpower in international finance.