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The So-called Debt Trap Is Propaganda with Ulterior Motives

Source: Science and Technology Daily | 2022-09-22 10:07:41 | Author: Mohammad Saiyedul Islam


China finished the construction of the Bangladesh's Padma bridge in June, 2022.(PHOTO: LI XIANG AND DING HAIDONG)

By Mohammad Saiyedul Islam

China is providing huge loans and financial support to the developing countries in Asia, Africa, and Latin America, mainly for highways, railways, deep sea ports and other infrastructure.

However, to a handful of critics, these countries are tempted by China to invest the money loaned in such projects whose "Economic Feasibility" is shaky. This is because, after the completion of the project, the Chinese debt cannot be paid off from the income derived from these projects. As a result, these countries are trapped in debt and forced to hand over the long-term authority of those projects.

In this regard, the U.S. and its alliance have rebuked China, saying that developing countries are going bankrupt because of Chinese debt. So, the question is, does China really create a debt trap for developing countries? The answer is No!

China is investing using its own economic capabilities, and the Belt and Road Initiative (BRI). The BRI is by far the largest intercontinental mega-project in human history, put forward by China in 2013.

According to the spokesperson of the Chinese Foreign Ministry, as of July 4 this year, China had signed cooperation documents on Belt and Road cooperation with 149 countries and 32 international organizations, forming more than 3,000 cooperation projects with an investment scale of nearly one trillion USD.

Critics say China has deliberately trapped Sri Lanka in debt and blamed it for the current turmoil the country is in.

On March 29, 2020, the Hindustan Times reported that 36.4 percent of Sri Lanka's debt is in international sovereign bonds. This is followed by debt to the Asian Development Bank (14.6 percent), Japan (10.9 percent) and China (10.8 percent). So, blaming China for Sri Lanka's bankruptcy is tempting, but not realistic.

In 2021, various media outlets reported that China had seized Uganda's Entebbe International Airport in a debt trap related move. The Chinese and Ugandan governments denied the allegation. The news agency Bloomberg checked the agreement documents and said that this allegation is invalid. They did not find any signs of a debt trap.

If you don't only listen to Western critics and do a little research, this China-centric noise looks pretty inconsequential. While much is heard about how China is acting as a neocolonial power, nothing is said in Western media about how China waived its debt to poor countries, mostly in Africa.

According to Forbes, on May 29, 2019, over the period 2000 to 2018, China has written off around 9.8 billion USD of debt to other countries, and around 50 percent of China's cancellations have gone to highly indebted poor countries.

On November 20, 2020, China's Finance Minister Liu Kun, said China has extended debt relief to poor countries worth a combined 2.1 billion USD under the G20 framework.

According to the Oxford China Africa Consultancy, Cuba had its debt of six billion USD in 2011 canceled. Outside of Africa, other large debt cancellations include Pakistan (500 million USD) and Cambodia (490 million USD).

An article by Chris Devonshire Ellis on the Silk Road Briefing website claims that China typically lends at two percent interest with repayment over ten years. Dr. Ishrat Hussain, the advisor to the Pakistani Prime Minister, dismissed the Chinese debt trap theory and said that China offers very cheap loans at 2.34 percent interest.

There are fundamental differences between Chinese debt relief and debt relief from the U.S. and its controlled global financial institutions. Regarding lending, China never compromises on three things, "discuss together, build together, and share together." It can be said that China's lending policy is a win-win situation for developing countries.

Instead of colonialism, China provides "solidarity" among developing countries. The idea of solidarity was first brought up by Chairman Mao Zedong. Since then, China has built trade and investment relations mainly with a vision of mutual cooperation.

Hence, propaganda about the "' Debt Trap" has emerged as a major weapon of geopolitical strategy. Though the Western world is not satisfied with this initiative of China, the country's loans are really a boon for the poor and developing countries of the third world.

Mohammad Saiyedul Islam is a doctoral fellow at Jiangxi University of Finance and Economics, and a Bangladeshi Journalist based in China.


Editor: 汤哲枭

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