Updated: Sep 01, 2022 15:25 IST
Beijing [China], September 1 (ANI): China lures economically vulnerable countries by lending finances to them and then leaving the countries with no way to bail themselves out of debt or to make ends meet for their citizens, according to an analysis.
The recent target of China’s debt trap was Sri Lanka, whose crisis was caused by a combination of misfortunate circumstances and unwise decisions on the part of the authorities, however, a big part in this scenario was also played by China, with its position as one of the world’s leading bilateral creditor nations, reported Asian Lite International.
China has been embroiled in Sri Lanka’s geopolitical scenario since the catastrophic civil war in the early 2000s. However, more often than not, aid from Beijing has been accompanied by sinister motives. For instance, the infamous Hambantota Port project that China pushed and paid for had no viability, to begin with- a factor the creditor giant was well aware of. Using Colombo’s inability to make payments, China acquired majority stakes in a strategically located massive project on foreign soil.
Beijing’s method of gaining a monopoly in South Asia has been driven by extensive lending in the region, using countries as pawns to further its own geopolitical agenda of increasing international influence and gaining control.
And according to recent research, Pakistan and Laos are likely to follow in the footsteps of Sri Lanka. Deep insights into these economies reveal that these countries are nearing the economic state that Sri Lanka was in, prior to default- having minimal financing available to them from external creditors, and large financing gaps which are a matter of concern out of all other Asian frontier markets.
In the case of Laos, which is closely following the economic ruin of Sri Lanka, is also on the brink of financial collapse and defaulting on all payments. The country’s inflation has hit a high of 23.6 per cent, while its total debt has reached a colossal USD 14.5 billion, which the country cannot hope to repay any time soon, reported Asian Lite International.
China, being the financer for Laos, had made an investment worth at least USD 16 billion and the fact is that the majority of projects, which China undertakes, involve large-scale infrastructure that the country does not require.
Laos’ ambitions to become the centre of trade and infrastructure have left it buying into the construction of railway lines and hydroelectric plants that have no use for the country, which have ultimately led to the breaking of the country’s back in its attempts to repay its loans.
For small countries with large aspirations, China’s debt traps fall right into place with a little nudge in the right direction. Ultimately when the country reaches the verge of default with its inability to repay loans, the dragon swoops in to take control of national assets in lieu of repayment.
Pakistan, China’s biggest supporter and ally, has often been rescued by Beijing in times of fiscal crisis. China has been issuing emergency loans to Islamabad for the purpose of balance of payments since 2017 when Pakistan ran into trouble with surmounting international debt and rising costs of imports. Since then, China has maintained its role of saviour to the Islamic state and has lent USD 21.9 billion in short-term loans in the last four years, according to Asian Lite International.
China’s “all-weather” friend, Pakistan, is facing a bad time economically and political situation. And Pakistan’s tumultuous economic climate makes it impossible for the country to make payments on these loans that are being doled out, steepening Islamabad’s fall further into China’s debt traps.
Pakistan’s fallen on even harder times as the substantial projects under the special China-Pakistan Economic Corridor (CPEC) have left Pakistan vulnerable to getting crushed by further loans pouring into the nation that it cannot hope to repay.
Furthermore, the infrastructure projects under CPEC in the country have fallen flat on its face, failing to fetch any investments or revenue. Once heralded as the flagship project of the partnership, the Gwadar Port has caused more trouble than it is worth. Having been brought to the spotlight following massive protests, the $46 billion project links the Gwadar port in Balochistan to the Xinjiang province in China via the Arabian Sea.
The vicious cycle only ever shuffles money from one source to another, without solving the underlying debt problems. Ultimately, South Asian countries that choose to depend on China, are falling further into their debt traps, with no way out. (ANI)