China experts open to debt for nature swaps but want an “internally agreed mechanism” first

One of the biggest creditors to developing countries, China, is under pressure to consider debt for nature swaps as a solution. As Eco-Business reports, typically bilaterally agreed bailouts are often on China’s own terms, but increasingly, the major creditor has been pressed to consider debt for nature swaps. Experts from China are however raising concerns that there are no established practices to navigate debt for nature swap negotiations and are suggesting there is a need for a “internationally-agreed mechanisms and support systems” to first be in place. Vice President of Chinese Eximbank, Dr Zhang Wencai, has underscored the novelty of debt for nature swaps, and that more consultations with stakeholders are still necessary. He stated “rising debt is crowding out investments and technology capital is also inadequate, so we find that the offers are not feasible at the moment. We need a more realistic debt-for-nature swap mechanism.” Instead of debt-for-nature swaps, China apparently is instead leaning into “pause clauses” or what are known as climate resilient debt clauses to provide borrowing countries with more time to repay their debts.

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