The latest development in the ongoing scrutiny of China’s economic policies has seen a senior U.S. Treasury official criticize the International Monetary Fund (IMF) for its lenient stance.

What Happened: The International Monetary Fund (IMF) has been criticized for being “too polite” regarding China’s economic policies, Reuters reported.

Brent Neiman, the Treasury’s deputy undersecretary for international finance, stated that the IMF has not applied sufficient analytical rigor to China’s industrial policies. Speaking at an event hosted by the OMFIF financial think tank, Neiman emphasized that the IMF should be a “ruthless truth teller” and more transparent about financing assurances from China and other countries.

Neiman pointed out that the IMF’s economic assessments of China do not adequately address exchange rate and industrial policies. He noted that the IMF does not publicly comment on the role of state-owned banks in managing China’s exchange rate or discrepancies in the People’s Bank of China’s balance sheet and reserve transactions.

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Neiman also criticized the IMF’s lack of transparency in disclosing external financing assurances, citing recent programs for Argentina, Ecuador, and Suriname. He mentioned that such assurances were either not delivered or significantly delayed. The IMF recently approved a $7 billion program for Pakistan, which included financing assurances from China, Saudi Arabia, and the UAE, but did not provide details.

The IMF and World Bank will review various policies during their annual meetings in Washington, scheduled for the week of Oct. 21.

Why It Matters: The U.S. has been increasingly vocal about China’s opaque lending practices, particularly its emergency loans to debt-laden countries. The U.S. raised concerns about China’s secretive emergency loans, urging for greater transparency. Neiman highlighted that these loans, often provided through swap agreements, bind countries closer to China economically while imposing high interest rates. This issue was previously discussed by the Biden administration with Chinese officials in Washington.

China’s central bank facilitates these loans, allowing countries to borrow Chinese renminbi and use their U.S. dollar reserves to repay foreign debts. This arrangement has raised alarms due to the lack of transparency and the potential for deepening economic dependencies on China.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari