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China’s Debt Trap Diplomacy - Coggle Diagram
China’s Debt Trap Diplomacy
Context
Many also blame China for the unprecedented crisis
Defaults over China’s infrastructure loans for Hambantota Port
Sri Lanka continues to grapple with its worst-ever economic crisis
What is Debt Trap Diplomacy?
Political leverage is exploited
IMF and Chinese tools of coercion
Term was coined by an Indian academic
Brahma Chellaney
Attacks are made on sovereignty and decision makings
Loans to repay loans
Features of such diplomacy
Such loans benefit the lender by undue exploitation of the borrower
Interest rates are hefty and unrealistic
More conditional loans are offered to repay and restructure old debts
It seeks sovereign guarantee and sovereign leases
Terms of the loans are often not publicized
Default leads to geo-strategic overtakes ex. PLA Navy being deployed at Hambantota Port
Lending is initially very indiscriminate
Sri Lankan Case
It granted China a 99-year lease of the Hambantota harbour
Also 15,000 acres of land in exchange for $1.2 billion
In July 2017, the Sri Lankan government and CMPort signed an agreement
Signed under Rajapaksas
Lured by strategic investments of China
How does China seek to achieve this?
Secrecy of negotiations
Bidding is closed-door
Ignorance to creditworthiness
Bribing of the govt
Belt and Road Initiative (BRI)
Worst outcomes
Gulf region:China constructed its first military base in Djibouti
Pakistan: It is literally sold to into the hands of the China over CPEC
India: SL allowed China control over a key port positioned at the doorstep of its regional rival India
Sri Lanka: It was forced to hand over control of the Hambantota port project to China for 99 years
Chinese prophecy of its policy
Already existing debt distress
Debt-Restructure Policy
Success of such loans
Its borrowers who seek loans
Obsession for China over the West
Waivers are considered
Anti-China sentiments
Why do countries go for Chinese offers?
Former colonists turned blind eyes
China empathized when nobody else did
Negligence by World Bank and IMF
Blaming Beijing is the easier option
Distressed under-developed /developing countries
A critical assessment
Debt for a debt has become crème de la crème
China is becoming increasingly opportunistic and seizing assets
Chinese morale are now high enough to prey its small neighbours
China has taken over exclusive development rights
Several projects are now bleeding money
Some developing economies are regretting their decision
Way forward
Countering China in maritime sphere
Alternatives for finances
Ring-fencing of neighbours
Atmanirbharta (Self-reliance) is the key to all such miseries.
India needs to loop in