Translated by: Ermat
Since 2013, Xi Jinping has launched the “One Belt, One Road” initiative, a massive loan of more than $1 trillion by the Chinese government to countries seeking to build infrastructure projects, especially those linked to China’s trade. In the past decade, under the guise of the “One Belt, One Road” initiative, the CCP has created debt trap diplomacy all over the world, causing disasters to many countries.
Debt-trap diplomacy is a debt-based bilateral diplomatic relationship, a term coined by Indian scholar Brahma Chellaney in 2017. While the term is most often associated with China, it also applies to the International Monetary Fund (IMF).
The term “debt trap diplomacy” began to be used in U.S. government documents during the Trump administration. It is mentioned in numerous U.S. government documents, including the 2020 State Department report “Elements of the China Challenge.”
According to Chellaney, China’s “One Belt, One Road” programme has provided huge loans to the governments of developing countries, leaving them vulnerable to Chinese communist influence when they are unable to repay the loans and have to hand over control of their strategic assets to China. Examples of possible “debt trap diplomacy” by the Chinese Communist Party in recent years include
1. a 2018 report by the Center for Global Development (CGD), a US think tank, which revealed that Tajikistan ceded more than 1,000 square kilometers of disputed land to China in 2011, in exchange for a portion of the country’s debt being forgiven.
2. In 2014, China lent the Republic of Montenegro nearly $1.6 billion to build the 163km Bar-Boljare Highway. The Financial Times said the contract specified that China could obtain coal mines, ports and even land in Montenegro as collateral if the country defaulted.
3. In December 2017, Sri Lanka leased the port of Hambantota to China for ninety-nine years because it could not pay its debts.
4. In September 2020, Reuters reported that Electricite du Laos and China Southern Power Grid signed a shareholding agreement in which China took a controlling stake due to the risk of a possible default.
In 2021, Laos and China signed a 25-year concession agreement for the electricity grid, which allows China to take full control of the Lao national grid system.
5. In March 2021, the Kenyan newspaper The Star reported that the country’s Auditor General had tabled a report in Parliament showing that the Chinese loan for the Mombasa-Nairobi SGR project was secured by the assets of Kenya Ports Authority (KPA) and Kenya Railways Corporation (KRC). and that the collateral is not protected by Kenya’s national sovereign immunity.
In addition, the Center for Global Development’s 2018 report lists eight high-risk countries that could fall into China’s debt trap, including Djibouti, Maldives, Laos, Montenegro, Mongolia, Tajikistan, Kyrgyzstan and Pakistan.
A 2018 report by the Belfer Center for Science and International Affairs at Harvard Kennedy School, on the other hand, lists 16 countries that are likely targets of a Chinese debt trap.
A report entitled “How China Lends: A Rare Survey of 100 Debt Contracts with Foreign Governments”, released on 31 March 2021 by AidData, a research institute affiliated with the US College of William and Mary, the Center for Global Development, the Kiel Institute for the World Economy and the Peterson Institute for International Economics, a Washington DC think tank, highlights the potential impact of Chinese lending activity on the sovereignty of borrowing countries. It is likely that the Chinese communist state holds national security concerns and interests in some of the projects it funds.
Sam Parker, an academic at Georgetown University Law School, told VOA that the report confirms long-standing concerns about Chinese lending. “The lack of transparency in Chinese loans, tied to collateral, makes it difficult for borrowers in general to renegotiate or manage their debt crises. China is accumulating huge debts that appear unlikely to be repaid,” he said.
In addition, Chowdhury recently wrote an article on the Indian media telegraph network, saying that even though the main purpose of China’s “One Belt, One Road” project is not to seize the tangible assets of borrowing countries, when considering borrowers, China has shown obvious strategic intentions, and careful consideration of whether the borrowing country can repay the loan.
He added that China may be relatively benign to African countries at the moment, but in geostrategically important regions such as Southeast Asia, South Asia and Central Asia, China has clearly acquired some tangible assets, such as Sri Lanka’s Hambanto port and Laos power grid. China will become more opportunistic and will try to seize assets of international strategic importance as the repayment deadlines of various borrowers come.
“These contracts are complicated and difficult to understand, and even the government itself doesn’t know how much money it owes China,” Pikes, chief executive of AidData, a research center at the College of William and Mary, told AFP. The study concluded that the Belt and Road Initiative is not a “grand plan to build alliances”, but a plan for China to profit. The “Belt and Road” has become the long arm of the CCP’s debt trap to control the world, and the deterioration has far exceeded the expectations of experts.
China’s international development financing commitments average about $85 billion a year. By comparison, the United States spends about $37 billion a year to support global development. But China lends differently: instead of funding projects through grants or loans from one country to another, nearly all of the money is given out in the form of state bank loans. Such loans do not show up in official accounts of Chinese government debt, but are obscured by “confidentiality clauses.”
According to AidData, the amount of under-reported debt is $385 billion. And many international development loans from the Chinese Communist countries require unusual forms of collateral.
Increasingly, loans from Communist countries require borrowers to commit to selling natural resources in exchange for cash loans, which can have serious implications for the autonomous economic development of debtor countries and even for political control by the Communist Party.