Beijing has utilised its new found wealth to lure developing Asian and African countries towards its debt trap.
In a recent online summit, all the members of the G-20 agreed to forego interest payments on loans given to other nations except one member: CHINA.
China has been systematically exploiting countries by extending loans which are way above their means to repay,
MY KEY TALKING POINTS;
1. These loans are sanctioned by the China Development Bank and Export-Import Bank of China which are both owned by the Chinese Government. Hence, these loans are indirectly given by the PRC government.
2. The main concerning point is the non-payment clauses which China inserts, If a country is unable to pay the interest/loan, then the infrastructure being made is seized by China for a certain period of time.
Eg; Hambantota port of Sri Lanka which is leased to Chinese Navy for 99 years.
3. The loans advanced are way above the paying capacity of the countries.
Eg; Djibouti has debt to China equivalent to 70% of its GDP.
4. These loans are mainly given for the purpose of developing infrastructure. The developmental work is assigned to Chinese companies ONLY as per the terms of the contract. Thus, there is influx of Chinese workers and management substituting local ones.
5. This also increases the soft (diplomatic) power of China which enables it to swing votes in its favor in international summits, assemblies and council giving major geopolitical leverage.
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Image courtesy the hindu & the strait times.