This well-timed book, by one of the world's leading experts, provides the first comprehensive account of China's aid and economic cooperation overseas. China's debt trap diplomacy often binds countries to Beijing's international vision. China has not engaged in deliberate "debt-trap diplomacy" in the Pacific, but the burgeoning scale of China's lending, and institutional weakness within Pacific states, pose clear risks for . You can also sign up to receive our other newsletters: Most Popular - Easy to read, daily digest of the news from The Hill and around the world, The Hill's must read political newsletter that breaks news and catches you up on what happened in the morning and what to look for after lunch. Found insideThis book focuses on the implementation of the China-Pakistan Economic Corridor (CPEC), a multi-billion-dollar infrastructure development project intended to connect Asia with Europe, the Middle East and Africa. But, as an unclassified U.S. intelligence report released on April 13 said, Xi’s regime will continue to promote BRI, while fine-tuning it in response to regional and international criticism. China's Debt-Trap Diplomacy. China has often been accused of "debt-trap diplomacy", a term coined by Indian geostrategist Brahma Chellaney to describe China's predatory lending practices. Editorial: editor@gatestoneinstitute.org. “Such terms give lenders an opening to project policy influence over the sovereign borrower, and effectively limit the borrower’s policy space to cancel a Chinese loan or to issue new environmental regulations. After the construction of the port in Hambantota, for example, Chinese firms and banks learned that strongmen fall and that they’d better have strategies for dealing with political risk. Beijing [China], September 2 (ANI): China has been striving to trap Eastern European nations in its debt diplomacy through the '17+1' initiative but the communist regime's ambitions have been . In this set of short stories Captain Hastings recounts 18 of Poirot’s early cases from the days before he was famous... Now Xi's grand thoroughfares are global in scope, extending as far as Djibouti, a strategic maritime chokepoint in Africa, just west of the Arabian Peninsula, or Ecuador, home to South America's third-largest oil reserves. Every contract since 2014 has incorporated a sweeping confidentiality clause that compels the borrowing country to keep confidential its terms or even the loan’s existence. Families in India and across Africa were demanding more consumer goods from China. In Asian Juggernaut, the revelatory and important International Bestseller by Brahma Chellaney, a renowned authority on Asia’s political and economic development offers an incisive and insightful analysis of the region’s pivotal role on ... Last year Laos' economic growth witnessed a dip from 5.5% in 2019 to a shocking 0.5% in 2020, for which undoubtedly pandemic . The editors reserve the right not to publish comments containing: incitement to violence, profanity, or broad-brush slurring of any race, ethnic group or religion. A prime example of China's debt-trap diplomacy In 2014, Montenegro successfully concluded negotiations with Chinese partners to finance a highway project which would connect the Montenegrin coastal city of Bar with Serbia's capital, Belgrade. It also plans to build near the port a Djibouti-style outpost for its navy. In 2017, a meme was born in a think tank in northern India: Chinese 'debt-trap diplomacy'. China, choosing the second path, has embraced colonial-era practices and rapidly emerged as the world's biggest official . Sri Lanka, for instance, after having failed to meet its debt obligations to China, . "Short of this, U.S. and other Western taxpayers would be in essence bailing out Chinese financial institutions and enabling China's debt-trap diplomacy." The senators outlined specific actions the U.S. should take in response to China's predatory lending practices: Continue efforts to help countries review the viability of BRI projects When Beijing settles on an infrastructure project, large numbers of Chinese workers arrive in the host country, establish their own living area, complete the project and then leave. Instead of first evaluating a borrower country’s creditworthiness, including whether new loans could saddle it with an onerous debt crisis, China is happy to lend. The term was first used in 2017; within 12 months it had quickly spread through the media, intelligence circles, and Western governments. Colombo chose the former, conscious that global interest rates were trending higher during the negotiations and hoping to lock in what it thought would be favorable terms. In what Donald Trump might call a case of "fake news," China has often been accused of using "debt trap" diplomacy to lure developing nations into borrowing more than they can afford to finance . China's debt trap diplomacy is often described as a long-term goal to entrap African nations in debt commitments they cannot fulfill and ultimately leverage that pretext to obtain resources . Drawing from the work of Chinese official and analytic communities, China's Eurasian Century? We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. Grassley, Senators Express Concerns over China's "Debt Trap" Diplomacy with Developing Countries WASHINGTON - U.S. Sen. Chuck Grassley of Iowa joined Sen. Joe Donnelly of Indiana and a bipartisan group of 14 other senators to express concern over potential bailout requests to the International Monetary Fund (IMF) by countries that have . Debt-trap diplomacy? The objectives of China's global BRI programs are clearly as much strategic and political as they are economic. Rajapaksa called a surprise election for January 2015 and in the final months of the campaign, his own health minister, Maithripala Sirisena, decided to challenge him. Lots of poison fruit falling from a poisoned tree. It is portrayed as the case par excellence for China's debt-trap diplomacy. "Why is that their goal? The latest to fall prey to China's debt-trap diplomacy is Laos, which recently signed a 25-year concession agreement allowing a majority Chinese-owned company to control its national power grid . The contents of this site are © 1998 - 2021 Nexstar Media Inc. | All Rights Reserved. Through its $1 trillion 'one belt, one road' initiative, China is supporting infrastructure projects in strategically located developing countries, often by . Dr. Lawrence A. Franklin was the Iran Desk Officer for Secretary of Defense Rumsfeld. By Mark Green. Some of the debt contracts in our sample could pose a challenge for multilateral cooperation in debt or financial crises, since so many of their terms run directly counter to recent multilateral commitments, long-established practices, and institutional policies,” the study noted. All Rights Reserved. The water on which millions of citizens on Ghana live is rendered undrinkable. The details are important: China Eximbank offered a $307 million, 15-year commercial loan with a four-year grace period, offering Sri Lanka a choice between a 6.3 percent fixed interest rate or one that would rise or fall depending on LIBOR, a floating rate. As the story goes, Beijing pushed Sri Lanka into borrowing money from Chinese banks to pay for the project, which had no prospect of commercial success. The Colombo port, however, was smack in the middle of the city, while Hambantota had a hinterland, meaning it offered greater potential for expansion and development. China's debt-trap diplomacy. Contact: info@gatestoneinstitute.org He said there were eight to 10 countries in Africa now in debt distress where . BRI, Chinese President Xi Jinping’s signature initiative, has been plagued by allegations of corruption and malpractice, and many of its completed projects have proved not to be financially viable. China's contracts give lenders broad scope to cancel loans or accelerate repayments if debtors' policies are deemed . In stark contrast, interest rates for Japan’s infrastructure loans to developing countries, for example, mostly run below half a percent. Atena Daemi, a popular 29-year-old women's rights activist and campaigner against the death penalty, was violently re-arrested by Iranian authorities on November 26, 2016. Countries participating in China's BRI, and generally friendly to the US and its allies, might shy away from supporting the West's national security concerns for fear of losing large Chinese investments in their local economies. A new international study has shed light on China’s muscular and exploitative lending practices by examining 100 of its loan contracts with 24 countries, many of which participate in its Belt and Road Initiative (BRI), an imperial project that seeks to make real the mythical Middle Kingdom. Biden Admin Gives Iran's Mullahs Another Victory: Taliban Takeover. As a result, some of these countries are becoming saddled with debt, leaving them even more firmly under China . China is the single largest creditor to Africa, accounting for almost 20 percent of all debts owed by the continent. by Lawrence A. Franklin China's debt trap diplomacy is often described as a long-term goal to entrap African nations in debt commitments they cannot fulfill and ultimately leverage that pretext to obtain resources . Found insideIn this context, it highlights the importance of China's Belt and Road Initiative and of corresponding initiatives by the United States, Japan, India and Australia, among others.This book argues that many of the world's most advanced ... Throughout exploitation of its debts, China has convinced the Sri Lankan government to agree to a 99 year lease to operate its strategic Hambantota port. It seems clear that China wants to shake Djibouti. To the country’s shock, and perhaps his own, Sirisena won. The rapidly deteriorating state of Papua New Guinea's economy is presenting serious challenges for the PNG government, which is already struggling to finance its 2020 budget. Found insideIn this volume, six primary research streams of the Wolfensohn Center’s work are highlighted: the shifting structure of the world economy in the twenty-first century; the challenge of scaling up development interventions; strategies for ... Working of its debt-trap diplomacy: • It is all part of Beijing's "Belt and Road" initiative - also known as "One Belt, One Road" (OBOR) - a US$8 trillion plan to create a new Silk Road with sea and land links across Asia and Africa to Europe. Countries such as Vietnam were growing rapidly and would need more natural resources. Initially, these proposals had only involved countries along BRI routes. China's growing threat via debt trap diplomacy. RIP "Chinese Debt Trap Diplomacy" (2017-2021) Four years after Indian academic Brahma Chellaney first introduced the concept of Chinese " debt-trap diplomacy ," the now widely-debunked theory appears to be flaming out. We experienced this tragically in the 1930's and now we are living through the immensely destructive consequences from the deadly threat of a hubristic totalitarian regime. What is bad about China extending its influence in impoverished countries? The conventional account is that China lent money to Sri Lanka to build the port, knowing that Colombo would experience debt distress and Beijing could then seize it in exchange for . . American statesman John Adams, who served as president from 1797 to 1801, famously said, “There are two ways to conquer and enslave a country: One is by the sword; the other is by debt.” China, choosing the second path, has embraced colonial-era practices and rapidly emerged as the world’s biggest official creditor. Riveting and important, this book exposes the global connections of a troubled region that must no longer be ignored. A more famous example is the Sri Lankan transfer of the Hambantota Port, along with more than 6,000 hectares of land around it, to Beijing on a 99-year lease. The loan is part of a so-called debt-trap diplomacy in which China engages in infrastructure projects in poorer countries, a pattern it has followed to establish its global Belt and Road . China will pocket 91 percent of the port’s revenues. Of course threats to democracy are a concern.But we must also remember that pandemics such as the current SARS-Cov-2 are part of the puzzle.With the major rains and flooding that China experienced, including flooding of Wuhan, once the waters subside, the vegetation and ecology are likely to explode, including the food of the horseshoe bats that harbour the Coronovirus with downstream consequences, unless control measures are in place. Opinion — Nigeria-China Relations: Sovereignty and Debt-Trap Diplomacy. In most cases, Chinese officials offer large sums of investment to a country's powerful elites, who accept the loans to modernize their nation's infrastructure. While it may have decided . Delivered to your inbox every weekday evening, our politics and policy newsletters are a daily digest of today's news and what's expected to break tomorrow. The Chinese Communist Party's Belt and Road Initiative is red colonialism and slavery on monumental scale. In China's debt-trap diplomacy, Pakistan is struggling to repay loans for power projects under President Xi Jinping's Belt and Road Initiative (BRI) and seeks to reschedule as much as USD 22 . China Merchants was already operating a new terminal in the port in Colombo, and China Harbor had invested $1.4 billion in Colombo Port City, a lucrative real-estate project involving land reclamation. Post-COVID-19: Will China's 'Debt Trap Diplomacy' in Africa Falter? Gatestone also reserves the right to edit comments for length, clarity and grammar, or to conform to these guidelines. The notion of "debt-trap diplomacy" casts China as a conniving creditor and countries such as Sri Lanka as its credulous victims. Colonization by other means: China's debt-trap diplomacy. China's debt-trap diplomacy. By Brahma Chellaney, Opinion Contributor China's Debt-Trap Diplomacy. In those countries, China has vastly improved their living standards, building roads, railways, hospital and power infrastructure and giving employment. A few of these bilateral packages appear contrived to imprison already impoverished states into realms of permanent economic vassalage to China. They promised to bring big ships to the region, a call that gained urgency after the devastating 2004 tsunami pulverized Sri Lanka’s coast and the local economy. The economic benefits, however, of some of these deals between China and poor "Third World" countries in Africa and Latin America are questionable. China's Belt and Road Initiative has raised important questions about the risk of debt problems in less-developed countries. In another previous article Chinese Debt Trap Diplomacy in Africa : The Case of Ghana - A Report we presented to our readers how China is exploiting natural resources and in turn destroying the Land and Water resources in an African Nation Ghana. As states around the world pile on debt to combat the coronavirus pandemic and bolster flagging economies, fears of such possible seizures have only amplified. A Chinese company’s acquisition of a majority stake in the port was a cautionary tale, but it’s not the one we’ve often heard. Found insideThorough and well researched, the book also investigates the potential for conflicts over trade, China's evolving relationship with Trump, and the country's attempt to win influence and control in Eurasia through the Belt and Road ... Some Muslim states have even praised China's domestic policies toward Xinjiang's ethnic Uyghurs. Putting pressure on China's finances. The articles printed here do not necessarily reflect the views of the Editors or of Gatestone Institute. The term "debt-trap diplomacy" was promoted by Brahma Chellaney to describe what he said is China's predatory lending practices in which poor countries would be overwhelmed with unsustainable loans and forced to cede strategic leverage to China. A close look at the evidence suggests that China has not been engaged in "debt-trap diplomacy" in the Pacific, at least not so far. China has emerged as a major new financier, extending attention-grabbing loans to Pacific governments now officially brought under its sprawling Belt and Road Initiative (BRI). Critics of China's BRI program point out that Chinese loan agreements lack transparency and that contracts sometimes serve China's interests in a racketeering way, oblivious to local concerns. Gatestone Institute is a 501(c)3 not-for-profit organization, Federal Tax ID #454724565. The narrative wrongfully portrays both Beijing and the developing countries it deals with. Like opposition candidates in Malaysia, the Maldives, and Zambia, the incumbent’s financial relations with China and allegations of corruption made for potent campaign fodder. Iranian Mullahs' Torture Epidemic: UN, EU, Biden Administration Continue Appeasing Anyhow, Iran's Mullahs Closer Than Ever to Obtaining Nuclear Weapons, Belarus Floods EU with Migrants from Middle East, Dealing with Taliban: It's Urgent to Wait. This book will evaluate how well China is executing that vision and whether Africa's socio-economic star really is rising, and consider just what type of world leader China seeks to be. An enthralling journey across China's 'New Silk Road', through which it hopes to transform Asia and the world economy. Commenters' email addresses will not be displayed publicly. As one Malaysian politician remarked to us, speaking on condition of anonymity to discuss how Chinese finance featured in that country’s political drama, “Can’t the U.S. State Department tell the difference between campaign rhetoric that our opponents are slaves to China and actually being slaves to China?”. China's disregard for the human rights of its own citizens not surprisingly extends to the rights of the citizens of its host nations. Within 12 months it generated nearly 2 million search results on Google in 0.52 seconds and was beginning to solidify into a deep historical truth. Critics of the BRI accuse China of pursuing a policy of 'debt-trap diplomacy': luring poor, developing countries into agreeing unsustainable loans to pursue infrastructure projects so that, when they experience financial difficulty, Beijing can seize the asset, thereby extending its strategic or military reach. Coined the preceding year by an Indian pundit, the term implies that Beijing is purposely striking unsustainable debt-for-infrastructure deals with developing countries along the routes of its ubiquitous Belt and Road Initiative (BRI). For a conflict-torn country that struggled to generate tax revenue, the terms of the loan seemed reasonable. Pence voiced worry that Hambantota could become a “forward military base” for China. Then ask again what's bad about China extending it's influence. This meme quickly spread through the media, intelligence circles and Western governments. A must-read political newsletter that breaks news and catches you up on what is happening. ASEAN AND CHINA'S DEBT TRAP DIPLOMACY. Examines Chinese engagement with African nations, focusing on (1) Chinese and African objectives in the political and economic spheres and how they work to achieve them, (2) African perceptions of Chinese engagement, (3) how China has ... China, we are told, inveigles poorer countries into taking out loan after loan to build expensive infrastructure that they can’t afford and that will yield few benefits, all with the end goal of Beijing eventually taking control of these assets from its struggling borrowers. China and other countries are becoming more sophisticated in bargaining with one another. Opinion — Nigeria-China Relations: Sovereignty and Debt-Trap Diplomacy. As the Chinese military base in the Badakhshan region underscores, China has expanded its foothold in Tajikistan, thanks to a corrupt power elite there. Beijing [China], September 2 (ANI): China has been striving to trap Eastern European nations in its debt diplomacy through the '17+1' initiative but the communist regime's ambitions have been . But the plan to build a port in Hambantota gained traction during the rule of the Rajapaksas—Mahinda Rajapaksa, who served as president from 2005 through 2015, and his brother Gotabaya, the current president and former minister of defense—who grew up in Hambantota. […] China, choosing the second path, has embraced colonial-era practices and rapidly emerged . Rather, its infrastructure financing comes mainly in the form of market-rate loans like those from private capital markets. The debt trap is not just about China, it is a burden for our countries - it is about the global conditions, our dependence on raw material, our exporting and the large informal sector." Amani Abou-Zeid, the African Union's commissioner for infrastructure and energy, is talking to Euromoney from Cairo. Realizing that they needed more experienced operators, the SLPA signed an agreement with China Harbor and China Merchants Group to have them jointly develop and operate the new port for 35 years. Nonetheless, if future Chinese lending continues on a business-as-usual basis, serious problems of debt sustainability will arise, and concerns about quality and corruption are valid. A man takes photo of a sign promoting the Belt and Road Forum in Beijing on April . Chinese firms are not the only companies to benefit from Chinese-financed projects. China, choosing the second path, has embraced colonial-era practices and rapidly emerged . Skeptics have also raised concerns that China is consolidating geopolitical power through predatory practices. In October 2018, Vice President Mike Pence said that China engages in "debt-trap diplomacy," and elaborated, China uses so-called "debt diplomacy" to expand its influence. Before the port episode, “Sri Lanka could sink into the Indian Ocean and most of the Western world wouldn’t notice,” Subhashini Abeysinghe, research director at Verité Research, an independent Colombo-based think tank, told us. He also served on active duty with the U.S. Army and as a Colonel in the Air Force Reserve. Yet the loans are often accompanied by stipulations that require the project to use Chinese . A few of these bilateral packages appear contrived to imprison already impoverished states into realms of permanent economic vassalage to China. BRI projects seem not designed so much to win new friends as to win new dependents, especially in areas either neglected by the West or in the Western sphere of influence. The heavier the debt burden on the borrower, the greater China’s own leverage becomes. Over the turn of the century, as Beijing's economic clout began to expand inexorably, China started saddling borrowing nations with enormous debts so as to increase its leverage over them. This book is the result of a collaborative effort among economists from China’s Peking University and the Brookings Institution. It offers in-depth analyses of these challenges and explores a number of essential questions. Reuters recently reported that the South Asian nation is handing over the majority control of the national electric power grid to China Southern Power Grid Company, a state-owned enterprise headquartered in Guangzhou. Maybe it's time for the US and other Western Countries to refinance these countries with a debt burden which will work for them and their citizens while relieving these countries of their future serfdom under the CCP. The 17+1 initiative is seen to be weakening in Eastern Europe with Lithuania . With the CPEC, Pakistan may have a new infrastructure on its land, but it is for the Chinese goods and lorries; and to advance the Chinese global agenda. Onerous terms and feeble revenues eventually pushed Sri Lanka into default, at which point Beijing demanded the port as collateral, forcing the Sri Lankan government to surrender control to a Chinese firm.