Very recommendable! Very concerning! This is mind boggling! Colonialism a la China in the 21st century!
"Recently released details of Kenya’s 2014 loan agreement with China to finance a controversial railway project have once again highlighted the predatory nature of Chinese lending in developing countries. The contract not only imposed virtually all risk on the borrower (including requiring binding arbitration in China to settle any dispute), but also raised those risks to unmanageable levels (such as by setting an unusually high interest rate). With terms like that, it’s no wonder that multiple countries around the world have become ensnared in sovereignty-eroding Chinese debt traps.
Over the past decade, China has become the world’s largest single creditor, with loans to low- and middle-income countries tripling in this period, to US$170 billion at the end of 2020. Its outstanding foreign loans now exceed 6% of global GDP, making China competitive with the International Monetary Fund as a global creditor. And through loans extended under its US$838-billion Belt and Road Initiative, China has overtaken the World Bank as the world’s largest funder of infrastructure projects. ...
This highlights the self-reinforcing debt spiral into which China thrusts countries. ...
Crucially, China’s loan contracts are typically shrouded in secrecy; Kenya’s revelations, for example, were technically in violation of its agreement’s sweeping confidentiality clause. In many cases, the loans are hidden from taxpayers, undermining government accountability. ...
China also increasingly channels its lending not to governments directly, but to state-owned companies, state-owned banks, special-purpose vehicles and private-sector institutions in recipient countries. ...
The scale of the bailout lending is massive. The top three borrowers alone—Argentina, Pakistan and Sri Lanka—have received US$32.8 billion in rescue lending from China since 2017. Pakistan has been the biggest borrower by far, receiving a staggering US$21.9 billion in Chinese emergency lending since 2018.
Crucially, China’s loan contracts are typically shrouded in secrecy; Kenya’s revelations, for example, were technically in violation of its agreement’s sweeping confidentiality clause. In many cases, the loans are hidden from taxpayers, undermining government accountability. ...
China also increasingly channels its lending not to governments directly, but to state-owned companies, state-owned banks, special-purpose vehicles and private-sector institutions in recipient countries. ...
Consider Laos, where hidden debts to China eclipse official debts. To stave off default following the pandemic shock, the small, landlocked country was forced to hand China majority control of its national electricity grid. And it may find itself with little choice but to barter away land and natural resources.
There is ample precedent for this. Already, several of China’s debtors have been forced to cede strategic assets to their creditor. Tajikistan has surrendered 1,158 square kilometres of the Pamir mountains to China, granted Chinese companies rights to mine gold, silver and other mineral ores in its territory, and approved the Chinese-funded construction of a military base near its border with Afghanistan.
Sri Lanka’s debt crisis first attracted international attention in 2017. Unable to repay Chinese loans, the country signed away the Indian Ocean region’s most strategically important port, Hambantota, and more than 6,000 hectares of land around it, by granting a 99-year lease to China. ...
Similarly, Pakistan has given China exclusive rights to run its strategically located Gwadar port for four decades. ..."
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