{"id":36553,"date":"2017-12-21T14:40:12","date_gmt":"2017-12-21T03:40:12","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=36553"},"modified":"2017-12-21T14:22:34","modified_gmt":"2017-12-21T03:22:34","slug":"chinas-creditor-imperialism","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/chinas-creditor-imperialism\/","title":{"rendered":"China\u2019s creditor imperialism"},"content":{"rendered":"
<\/figure>\n

This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. It was a major acquisition for China\u2019s Belt and Road Initiative (BRI)\u2014which President Xi Jinping calls the \u2018project of the century<\/a>\u2019\u2014and proof of just how effective China\u2019s debt-trap diplomacy can be.<\/p>\n

Unlike International Monetary Fund and World Bank lending, Chinese loans are collateralised by strategically important natural assets with high long-term value (even if they lack short-term commercial viability). Hambantota, for example, straddles Indian Ocean trade routes linking Europe, Africa and the Middle East to Asia. In exchange for financing and building the infrastructure that poorer countries need, China demands favourable access to their natural assets, from mineral resources to ports.<\/p>\n

Moreover, as Sri Lanka\u2019s experience starkly illustrates, Chinese financing can shackle its \u2018partner\u2019 countries. Rather than offering grants or concessionary loans, China provides huge project-related loans at market-based rates, without transparency, much less environmental- or social-impact assessments. As US Secretary of State Rex Tillerson put it recently<\/a>, with the BRI, China is aiming to define \u2018its own rules and norms\u2019.<\/p>\n

To strengthen its position further, China has encouraged its companies to bid for outright purchase of strategic ports, where possible. The Mediterranean port of Piraeus, which a Chinese firm acquired for US$436 million from cash-strapped Greece last year, will serve as the BRI\u2019s \u2018dragon head<\/a>\u2019 in Europe.<\/p>\n

By wielding its financial clout in this manner, China seeks to kill two birds with one stone. First, it wants to address overcapacity at home by boosting exports. And, second, it hopes to advance its strategic interests<\/a>, including expanding its diplomatic influence, securing natural resources, promoting the international use of its currency, and gaining a relative advantage over other powers.<\/p>\n

China\u2019s predatory approach\u2014and its gloating<\/a> over securing Hambantota\u2014is ironic, to say the least. In its relationships with smaller countries like Sri Lanka, China is replicating the practices used against it in the European-colonial period, which began with the 1839\u20131860 Opium Wars and ended with the 1949 communist takeover\u2014a period that China bitterly refers to as its \u2018century of humiliation<\/a>\u2019.<\/p>\n

China portrayed the 1997 restoration of its sovereignty over Hong Kong, following more than a century of British administration, as righting a historic injustice. Yet, as Hambantota shows, China is now establishing its own Hong Kong\u2013style neocolonial arrangements. Apparently Xi\u2019s promise of the \u2018great rejuvenation of the Chinese nation\u2019 is inextricable from the erosion of smaller states\u2019 sovereignty.<\/p>\n

Just as European imperial powers employed gunboat diplomacy to open new markets and colonial outposts, China uses sovereign debt to bend other states to its will, without having to fire a single shot. Like the opium the British exported to China, the easy loans China offers are addictive. And, because China chooses its projects according to their long-term strategic value, they may yield short-term returns that are insufficient for countries to repay their debts<\/a>. This gives China added leverage, which it can use, say, to force borrowers to swap debt for equity, thereby expanding China\u2019s global footprint by trapping a growing number of countries in debt servitude.<\/p>\n

Even the terms of the 99-year Hambantota port lease echo those used to force China to lease its own ports to Western colonial powers. Britain leased the New Territories from China for 99 years in 1898, causing Hong Kong\u2019s landmass to expand by 90%. Yet the 99-year term was fixed merely to help China\u2019s ethnic-Manchu Qing Dynasty save face; the reality was that all acquisitions were believed to be permanent.<\/p>\n

Now, China is applying the imperial 99-year lease concept in distant lands. China\u2019s lease agreement over Hambantota, concluded this summer, included a promise that China would shave US$1.1 billion off Sri Lanka\u2019s debt. In 2015, a Chinese firm took out a 99-year lease on Australia\u2019s deep-water port of Darwin\u2014home to more than 1,000 US Marines\u2014for US$388 million<\/a>.<\/p>\n

Similarly, after lending billions of dollars<\/a> to heavily indebted Djibouti, China established its first overseas military base this year in that tiny but strategic state, just a few miles from a US naval base\u2014the only permanent American military facility in Africa. Trapped in a debt crisis, Djibouti had no choice but to lease land to China for US$20 million per year. China has also used its leverage over Turkmenistan to secure natural gas by pipeline largely on Chinese terms.<\/p>\n

Several other countries, from Argentina to Namibia to Laos, have been ensnared in a Chinese debt trap, forcing them to confront agonizing choices in order to stave off default. Kenya\u2019s crushing debt to China now threatens to turn its busy port of Mombasa\u2014the gateway to East Africa\u2014into another Hambantota.<\/p>\n

These experiences should serve as a warning that the BRI is essentially an imperial project that aims to bring to fruition the mythical Middle Kingdom. States caught in debt bondage to China risk losing both their most valuable natural assets and their very sovereignty. The new imperial giant\u2019s velvet glove cloaks an iron fist\u2014one with the strength to squeeze the vitality out of smaller countries.<\/p>\n","protected":false},"excerpt":{"rendered":"

This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. It was a major acquisition for China\u2019s Belt …<\/p>\n","protected":false},"author":482,"featured_media":36556,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[1920,52,435,1074],"class_list":["post-36553","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-belt-and-road-initiative","tag-china","tag-sovereignty","tag-sri-lanka"],"acf":[],"yoast_head":"\nChina\u2019s creditor imperialism | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/chinas-creditor-imperialism\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China\u2019s creditor imperialism | The Strategist\" \/>\n<meta property=\"og:description\" content=\"This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. 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