COUNTRIES FELL INTO CHINESE DEBT TRAP

China is playing with the poor economic conditions of many countries across the world. While China is funding on various projects of selected countries, their aim is not the development of such countries but to dictate terms upon them. There are already a good number of countries fallen to this debt trap.

Sri Lanka

Sri Lanka is portrayed as a country that has fallen into China's debt trap due to the Chinese aided public investment projects. Hambantota port was one such investment project, which was leased to China Merchant Port Holdings Limited for 99 years for $1.12 billion in 2017. It is a clean case of the debt trap.

Kyrgyzstan

Chinese Exim Bank has been the largest single creditor, with reported loans totalling more than $1.5 billion, roughly 40% of its total external debt. This country is at a vulnerable state of moderate risk.

Maldives

China has invested in about three nojor projects in Maldives. This country now owes $3.5 billion to Beijing. China is reported to have claimed an exclusive economic zone of around 8,59,000 sq km in a section of the Indian Ocean.

Laos

Laos being one of the poorest countries of South East Asia has been financed for a BRI linked projects to the tune of $6.7 billion.  This China - Laos rail project cost is about half of the country's GDP. IMF, in 2017 had raised it's perception of Laos' debt distress from medium to high due to the country's borrowing from China. Laos has been ranked as one of the most vulnerable countries participating in China's BRI.

Djibouti

The public debt of this East African country has increased to roughly 80% of their GDP. Major share of this funding is from China. The country has already been placed at high risk of debt distress. China is now eyeing at many more projects in this country.

Angola

This country being the second biggest oil producer of Africa is another example of the debt trap diplomacy of China. This country has so far repaid $25 billion in the form of crude oil despite creating several problems within their economy. Over 99% of Angolan export to China are petroleum products. China has so far lend over $60 billion through direct investments and infrastructure projects since 1983. Angola's ability to repay the debt depends upon the oil price. At present every Angolan citizen owes $754 to Bejing.

Pakistan

An estimated $62 billion in additional debt Pakistan is at high risk. About 80% of the finance have come from China. Pakistan will have to pay China $40 billion for the $26.5 billion CPEC investments in 20 years. This amount does not include the $8.2 billion Mainline project of Pakistan Railways. This is going to be the only project to be materialized in the coming few years. China gave loans $5.9 billion to Pakistan at interest rate ranging from 2% to 5.2%.  Three government loans amounting to $800 million have been obtained at 5.2%. Pakistan will have to return $7.5 billion to Beijing against a total of five infrastructure projects.

Further to the above Tajikistan, Montenegro and Venezuela are also in the debt trap of China.

What British companies did centuries ago is now being played by China. The top economic nations cannot remain as silent spectators. They may come forward to save these billions of distressed people of these countries from the debt trap of China.

KV George

kvgeorgein@gmail.com