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Argument: China’s Debt Diplomacy China’s Debt Diplomacy...
This week, leaders from around the world are descending on Beijing for China’s second Belt and Road Forum, a conference to showcase China’s signature diplomatic initiative. But these leaders should be clear-eyed that China’s efforts to use its Belt and Road Initiative (BRI) to broaden its geopolitical and economic clout risk saddling developing countries with unsustainable debt while increasing their dependency on China.
The fact that poorer countries struggle with debt is nothing new, but after years of successful efforts to reduce their debt burden—including through the largest debt forgiveness program in history, started under U.S. President Bill Clinton and advanced by the George W. Bush Administration and the international community—they are once again going into the red. Unlike before, developing countries’ strategic assets, such as their resources, mineral deposits, port access rights, and the like, are now targeted by creditors as collateral in many of these predatory deals.
In many vulnerable countries, much of the burdensome debt is owed to a single source: China. According to a study by the International Monetary Fund (IMF), from 2013 to 2016, China’s contribution to the public debt of heavily indebted poor countries nearly doubled from 6.2 percent to 11.6 percent. China’s lending is expanding even more through BRI. Noting a lack of economic feasibility of some BRI projects, many observers suspect that the initiative is partly motivated by China’s desire to stimulate its own economy, obtain strategic assets, and convert its economic access into political and strategic influence in recipient nations.
In such a scenario, the economic benefits of China’s debt-driven projects to recipient nations’ populations are an afterthought. And the lack of transparency in China’s lending obscures its risks to recipient countries, many of which are already vulnerable to or are suffering from financial or fiscal distress. But concealing risks does not eliminate their consequences, and when cash-strapped developing countries fail to pay back the loans for multibillion-dollar projects, it can result in a loss of strategic assets, major hurdles to economic development, and a loss of sovereignty.
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COMMENTS VIA TWITTER
"Very disappointed to see another Pacific country, Kiribati, hand its people’s future to China’s debt trap diplomac… https://t.co/zTROtVGfJw
As Trump called migrants from El Salvador “animals,” separated their children, and cut their aid, China saw an open… https://t.co/RvbungISqZ
Excuse me Mr. Castro you know China is using debt diplomacy and it only strengthens back accounts of tyrants and st… https://t.co/HWLIpVC5Nx
RT @KenRoth: As Trump called migrants from El Salvador “animals,” separated their children, and cut their aid, China saw an opening, though…
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