Armed with the Ramboll report, Sri Lanka’s government approached the United States and India; both countries said no. Asia's rise is a restoration of the past, not a revolution. This book is a must-read for anybody interested in the economic development of Asia. Video: Has China's diplomacy turned into economic coercion? The water on which millions of citizens on Ghana live is rendered undrinkable. No less significant is another unique clause: The contracts, the study found, obligate the borrower to exclude the Chinese debt from any multilateral restructuring process, such as the Paris Club of official bilateral creditors, and from any "comparable debt treatment." Topics Covered: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora. Found insideThorough and well researched, the book also investigates the potential for conflicts over trade, China's evolving relationship with Trump, and the country's attempt to win influence and control in Eurasia through the Belt and Road ... Then there is the policy of having the Chinese companies do all the construction and bring in their experts. This original book is the first to examine the significance of China's recent focus on soft power, that is, diplomacy, trade incentives, cultural and educational exchange opportunities, and other techniques, to project a benign national ... Found insideThis book further documents and analyses the development experiences including China’s large scale of migration and urbanisation, the demographic structural changes, the private sector development, income distribution, land reform and ... It is pressing matter as China is trying to position itself at the centre of the geopolitics, but let’s not completely get lured into these poorly designed BRI projects because we are letting China exert dominance over us which is not going to be good because at the end of the day, even if China starts dominating world affairs with BRI as its weapon, it is not a democratic country. He said there were eight to 10 countries in Africa now in debt distress where . China leverages its state-sponsored loans to aggressively advance its trade and geopolitical interests, with the study reporting pervasive links between Chinese financial, trade and construction contracts with developing countries. Debtbook diplomacy may play an important role in China's multifaceted campaign to erode these strategic advantages and shift the balance of power in Asia. Popular. Brahma Chellaney, a professor at the Centre of Policy Research in New Delhi, said Belt and Road Initiative investment "is not inherently bad" for lower-income countries, but in . China's debt-trap diplomacy. Just like the acquisition of Hambantota port, many such strategic assets are vulnerable to China’s debt trap diplomacy from Djibouti port, strait of Hormuz, Gwadar port, small islands of Maldives, ports in Myanmar, Thailand, etc. BRI, Chinese President Xi Jinping's signature initiative, has been plagued by allegations of corruption and malpractice, and many of its completed projects have proved not to be financially viable. In 2013, China introduced its new monetary infrastructure to the world, naming it as a modern-day Silk Road, invigorating the historic mercantilism routes between Europe and Asia. The study confirms that little of what China provides is aid or low-interest lending. China, choosing the second path, has embraced colonial-era practices and rapidly emerged as the world's biggest official creditor. EU launches new program to fight Red China's 'debt trap diplomacy'. That is where the debt-trap diplomacy is playing out to the benefit of China. The Canadian project failed to move forward, mostly because of the vicissitudes of Sri Lankan politics. A recent Chatham House research paper (Chatham House (chathamhouse.org): "Debunking the Myth of 'Debt-trap Diplomacy' How Recipient Countries Shape China's Belt and Road Initiative"; August 2020) argues that the BRI has in fact proceeded in a bottom-up manner, because "SOE's - the key agencies involved in implementing (and . A prime example of China's debt-trap diplomacy In 2014, Montenegro successfully concluded negotiations with Chinese partners to finance a highway project which would connect the Montenegrin coastal city of Bar with Serbia's capital, Belgrade. There was also never a default. Both decisions would come back to haunt the government. [citation needed] Some commentators use the term debt trap diplomacy to claim China intentionally extends excessive credit to a debtor country with the intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations [citation needed] (often asset-based lending, with assets . The concept of debt-trap diplomacy has been widely used in recent years, including by world leaders. The People’s Republic of China navy has built its first overseas military base in Djibouti, which is a gateway port to middle eastern countries and has been in use since 2017. EU Launches New Program to Fight Red China's 'Debt Trap Diplomacy'. But the plan to build a port in Hambantota gained traction during the rule of the Rajapaksas—Mahinda Rajapaksa, who served as president from 2005 through 2015, and his brother Gotabaya, the current president and former minister of defense—who grew up in Hambantota. She has approximately detected the basic obnoxious malpractices adopted by China for which no any nation would agree to China. A Chinese company’s acquisition of a majority stake in the port was a cautionary tale, but it’s not the one we’ve often heard. Once a country is weighed down by Chinese loans, like a hapless gambler who borrows from the Mafia, it is Beijing’s puppet and in danger of losing a limb. ( Log Out / Correction… China's Debt Trap Diplomacy. The relations between two countries goes way before the inception of BRI and later grown under the BRI banner. Montenegro, a country in the Balkans, is struggling to pay off Chinese loan for a highway project, which has put the country in a dire financial situation. On a closer look, however, the situation is far more complex. . China, Diplomacy, Debt, Development. In Hambantota, instead of waiting for phase 1 of the port to generate revenue as the Ramboll team had recommended, Mahinda Rajapaksa pushed ahead with phase 2, transforming Hambantota into a container port. Due to such instances, it has led to protest, resistance, shutting or postponement of projects, cancellation of licenses and permits and strained bilateral relations. Found insideDrawing on more than a decade of on-the-ground experience, Sebastian Strangio explores the impacts of China's rise on Southeast Asia, the varied ways in which the countries of the region are responding, and what it might mean for the future ... For a conflict-torn country that struggled to generate tax revenue, the terms of the loan seemed reasonable. This was in 2007, six years before Xi Jinping introduced the Belt and Road Initiative. If a country can't pay back their loans by a certain time period, China takes control of its trade routes. We reviewed a second feasibility report, produced in 2006 by the Danish engineering firm Ramboll, that made similar recommendations to the plans put forward by SNC-Lavalin, arguing that an initial phase of the project should allow for the transport of non-containerized cargo—oil, cars, grain—to start bringing in revenue, before expanding the port to be able to handle the traffic and storage of traditional containers. The first installment of the $1 billion loan from a Chinese state bank is due in July, and it's unclear whether Montenegro, whose debt has climbed to . To help the U.S. and its allies offset these consequences, this report proposes three sets of U.S. government recommendations for targeting and streamlining investment, strengthening . Debt-trap diplomacy is one of the significant hallmarks of China's foreign policy. About the author: Shreeya Patil is a 3rd year student pursuing her BA (Pol. It is claimed that China lures developing countries into huge loans, forcing them to cede strategic assets to China if they are unable to repay. Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government. But nations like Sri Lanka enthusiastically embraced China's lending and are, in many ways, masters of their own misfortune. Found inside – Page iiThrough a thorough analysis of China's recent history and economic development process, the authors of this book seek to explain the causes of China's economic rise and its impact on the rest of the world. It is portrayed as the case par excellence for China's debt-trap diplomacy. Biden presidency likely to ease US-China acrimony over infrastructure. China, choosing the second path, has embraced colonial-era practices and rapidly emerged . Its increased influence and domination, inflated price of the projects, political backlash, concern over drastic increase in external debt of several African countries, corrupt and delayed decisions, violation of quality standard and non-compliance of environmental laws, instances of malpractices, less employment opportunities for African people and low yielding projects makes it clear that China is profiting from Africa as Africa has to depend on China for technology and investments , entry of Chinese investment companies, materials, skilled labour and leaving no or less job opportunities to African people. The conventional account is that China lent money to Sri Lanka to build the port, knowing that Colombo would experience debt distress and Beijing could then seize it in exchange for . What is 'Dept-trap Diplomacy'? China has always felt vulnerable, and, in the 1990s, it began forming agreements with other nations, eventually culminating in the Belt and Road Initiative. The authors analyze China's engagement with the Developing World. Opinion — Nigeria-China Relations: Sovereignty and Debt-Trap Diplomacy. debt trap diplomacy " China has allegedly employed across the developing world, supposedly with the express aim of creating aid dependency and taking control of strategic resources and . Is Pakistan next prey to China’s debt trap diplomacy? Throughout exploitation of its debts, China has convinced the Sri Lankan government to agree to a 99 year lease to operate its strategic Hambantota port. The notion of "debt-trap diplomacy" casts China as a conniving creditor and countries such as Sri Lanka as its credulous victims. The coming collapse of China is always coming, never arriving. Thomas Orlik, a veteran of more than a decade in Beijing, turns the spotlight on China's fragile fundamentals, and resources for resilience. Until now Belt and Road has been discussed as a geopolitical and geoeconomic project. This book introduces geocultural power to the analysis of international affairs. But, as an unclassified U.S. intelligence report released on April 13 said, Xi's regime will continue to promote BRI, while fine-tuning it in response to regional and international criticism. Grassley, Senators Express Concerns over China's "Debt Trap" Diplomacy with Developing Countries WASHINGTON - U.S. Sen. Chuck Grassley of Iowa joined Sen. Joe Donnelly of Indiana and a bipartisan group of 14 other senators to express concern over potential bailout requests to the International Monetary Fund (IMF) by countries that have . https://www.researchgate.net/publication/348109039_POLICY_OF_CHINA’S_DEBT-TRAP_DIPLOMACY_The_Influence_Of_Media_In_Forming_Community_Political_Opinions, https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative, https://www.usip.org/publications/2021/05/pakistans-growing-problem-its-china-economic-corridor, https://theconversation.com/growing-dependence-on-china-is-dangerous-for-indonesia-what-can-be-done-150372, https://www.maritime-executive.com/editorials/is-china-using-africa-to-shape-a-new-global-maritime-order, A good research on the topic of “Chinese Money Trap” and how China is planning to have command over the world and even trying to extend it’s terroritory, Shreeya Patil’s thoughts on-CHINA’s DEBT TRAP DIPLOMCY…are quite noteworthy for each Indians at present. Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota. Before the port episode, “Sri Lanka could sink into the Indian Ocean and most of the Western world wouldn’t notice,” Subhashini Abeysinghe, research director at Verité Research, an independent Colombo-based think tank, told us. Indonesia is of utmost importance for China since major BRI projects would pass through Indonesia’s vast maritime territory and henceforth Indonesia has that leverage over China to renegotiate deals or can turn down loans as done by Nepal and Pakistan in favour of other sources of funding. This announcement comes after Sri Lankan President sought help from a visiting Chinese delegation in disproving a perception that China-funded . Buoyed by the victory, the government embarked on a debt-financed push to build and improve the country’s infrastructure. This book, the first of its kind to be published since the 1970s, examines all facets of China's relationship with each of the fifty-four African nations. After Pakistan and Sri Lanka, Venezuela appears to be the latest in . "Such terms give lenders an opening to project policy influence over the sovereign borrower, and effectively limit the borrower's policy space to cancel a Chinese loan or to issue new environmental regulations. The concept of a 99-year lease, ironically, emerged from the flurry of European colonial expansion in China in the 19th century. Being a student, appreciable is her long-term thoughts on lnternational level in search of peace & prosperity. One of the earliest successes of China's debt-trap diplomacy was in securing 1,158 square kilometers of strategic Pamir Mountains territory from the Central Asian nation of Tajikistan in 2011 in exchange for debt forgiveness. The latest victim of China's debt-trap diplomacy is the small, resource-rich nation of Laos, that is reportedly struggling to avoid a sovereign default. Vice President, Studies & Analysis, National Endowment for Democracy . By Mark Green. One such . Found insideA fascinating and thrilling account, The Beautiful Country and the Middle Kingdom is also an indispensable book for understanding the most important—and often the most perplexing—relationship between any two countries in the world. The free world is facing the greatest geopolitical challenge of our time. President Xi Jinping flagship econ. Change ), You are commenting using your Google account. The term was coined by Indian geo-strategist Brahma Chellaney in 2017. The eminent contributors to this volume offer a four-part analysis of the region's new importance in world affairs. Rajan Menon examines the place of Central Asia in a global perspective. Yet Hambantota’s location is strategic only from a business perspective: The port is cut into the coast to avoid the Indian Ocean’s heavy swells, and its narrow channel allows only one ship to enter or exit at a time, typically with the aid of a tugboat. American statesman John Adams, who served as president from 1797 to 1801, famously said, "There are two ways to conquer and enslave a country: One is by the sword; the other is by debt.". Before things slip from our hands, countries still have time to work on economic distress stemming from debt taken from China that would undermine development efforts altogether and should find another lender for its own betterment. While it may have decided . Forcing the other side to keep contractual provisions under wraps is also necessitated by the fact that China's loan accords equip it with "broad latitude to cancel loans or accelerate repayment if it disagrees with a borrower's policies," whether domestic or foreign policy, according to the study. In 2012, Sri Lanka borrowed another $757 million from China Eximbank, this time at a reduced, post-financial-crisis interest rate of 2 percent. Chellaney asserted that the aim of China's Belt and Road Initiative (BRI . The European Union announced on 15 September that it was launching a new investment program called the "Global Gateway" to counter China's controversial . The fact that economically and socially unstable Pakistan will not be able to repay the debt even though it has been estimated that it will take Pakistan about 40 years to repay, but eventually China will end up acquiring strategic assets like Gwadar port. Found insideThis book focuses on the implementation of the China-Pakistan Economic Corridor (CPEC), a multi-billion-dollar infrastructure development project intended to connect Asia with Europe, the Middle East and Africa. Chinese firms are not the only companies to benefit from Chinese-financed projects. Allegedly, this strategy enables . Rajapaksa called a surprise election for January 2015 and in the final months of the campaign, his own health minister, Maithripala Sirisena, decided to challenge him. Still, American leaders and thinkers from both sides of the aisle give speeches about China’s “modern-day colonialism.”. China's 'debt-trap' diplomacy is little more than a fantasy . We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. China, choosing the second path, has embraced colonial-era practices and rapidly emerged as the world's biggest official . Change ), You are commenting using your Twitter account. Found insideYet America often reaches for the gun over the purse to advance its interests abroad. Robert Blackwill and Jennifer Harris show that if U.S. policies are left uncorrected, the price in blood and treasure will only grow. Incredible potential for growth exists in Africa and West Asia! ( Log Out / Project Syndicate. Tajikistan's unending debt crisis has also forced it to grant Chinese companies rights to mine gold, silver and other mineral ores. China’s march outward, like its domestic development, is probing and experimental, a learning process marked by frequent adjustment. Debt-trap diplomacy has recently been associated with China as a new terminology, started as a meme by an Indian think tank in 2017, furthered through a paper in 2018 by two Harvard University . As states around the world pile on debt to combat the coronavirus pandemic and bolster flagging economies, fears of such possible seizures have only amplified. And it would be a shame if the U.S. fails to learn alongside them. Sri Lanka, for instance, after having failed to meet its debt obligations to China, . China's 'Debt-Trap' Diplomacy with Third-World Nations. Generally, low to middle income countries are lured to this debt trap so as to increase its leverage over it. The term "debt-trap diplomacy" was promoted by Brahma Chellaney to describe what he said is China's predatory lending practices in which poor countries would be overwhelmed with unsustainable loans and forced to cede strategic leverage to China. China's growing threat via debt trap diplomacy. Colombo arranged a bailout from the International Monetary Fund, and decided to raise much-needed dollars by leasing out the underperforming Hambantota Port to an experienced company—just as the Canadians had recommended. China's march outward, like its domestic development, is probing and experimental, a learning process marked by frequent adjustment. 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