@4cminews tweet: 2019 OCT 01 China’s Path Forward Is Getting Bumpy

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@4cminews tweet: 2020 MAY 24 More Countries May Fall into China’s Debt Trap With Covid-19

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@4cminews tweet: 2019 OCT 01 China’s Path Forward Is Getting Bumpy

This post comes from one of our syndications links which may have 3rd party Content and is subject to our Disclaimer on all content

2018 JUL 30 What Is China’S Belt And Road Initiative?

THE PROJECT IS OFTEN DESCRIBED: as a 21st century silk road, made up of a “belt” of overland corridors and a maritime “road” of shipping lanes.

 

Beijing’s multibillion dollar Belt and Road Initiative (BRI) has been called a Chinese Marshall Plan, a state-backed campaign for global dominance, a stimulus package for a slowing economy, and a massive marketing campaign for something that was already happening – Chinese investment around the world. 

Over the five years since President Xi Jinping announced his grand plan to connect Asia, Africa and Europe, the initiative has morphed into a broad catchphrase to describe almost all aspects of Chinese engagement abroad.

Belt and Road, or yi dai yi lu, is a “21st century silk road,” confusingly made up of a “belt” of overland corridors and a maritime “road” of shipping lanes.

From South-east Asia to Eastern Europe and Africa, Belt and Road includes 71 countries that account for half the world’s population and a quarter of global GDP.

Everything from a Trump-affiliated theme park in Indonesia to a jazz camp in Chongqing have been branded Belt and Road. Countries from Panama to Madagascar, South Africa to New Zealand, have officially pledged support.

HOW MUCH MONEY IS BEING SPENT?

The Belt and Road Initiative is expected to cost more than $1tn[1]SEE URL: https://www.morganstanley.com/ideas/china-belt-and-road (£760bn), although there are differing estimates as to how much money has been spent to date. According to one analysis, China has invested more than $210bn, the majority in Asia.

But China’s efforts abroad don’t stop there. Belt and Road also means that Chinese firms are engaging in construction work across the globe on an unparalleled scale.

GRAPH Total of Contracts Awarded to CCP:

To date, Chinese companies have secured more than $340bn in construction contracts along the Belt and Road.

However, China’s dominance in the construction sector comes at the expense of local contractors in partner countries.

The vast sums raked in by Chinese firms are at odds with the official rhetoric that Belt and Road is open to global participation and suggest that the initiative is also motivated by factors other than trade, such as China’s need to combat excess capacity at home.

WHAT ARE THE RISKS FOR COUNTRIES INVOLVED?

More recently, governments from Malaysia to Pakistan are starting to rethink the costs of these projects. Sri Lanka, where the government leased a port to a Chinese company for 99 years after struggling to make repayments, is a cautionary tale.

Earlier this year, the Center for Global Development found eight more Belt and Road countries at serious risk of not being able to repay their loans.

In eight countries, Belt and Road loans could increase the risk of debt distress …

GRAPH 2 Eight Countries, Belt and Road Loans:

The affected nations – Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan – are among the poorest in their respective regions and will owe more than half of all their foreign debt to China.

Critics worry China could use “debt-trap diplomacy”[2]SEE URL: https://www.theguardian.com/world/2018/may/15/warning-sounded-over-chinas-debtbook-diplomacy to extract strategic concessions – such as over territorial disputes in the South China Sea or silence on human rights violations. In 2011, China wrote off an undisclosed debt owed by Tajikistan in exchange for 1,158 sq km (447 sq miles) of disputed territory.

“There are some extreme cases where China lends into very high risk environments, and it would seem that the motivation is something different. In these situations the leverage China has as lender is used for purposes unrelated to the original loan,” said Scott Morris, one of the authors of the Washington Centre for Global Development report.

WHY IS THE INITIATIVE SPARKING GLOBAL CONCERN?

As Belt and Road expands in scope so do concerns it is a form of economic imperialism that gives China too much leverage over other countries, often those that are smaller and poorer.

Jane Golley, an associate professor at Australian National University, describes it as an attempt to win friends and influence people. “They’ve presented this very grand initiative which has frightened people,” says Golley. “Rather than using their economic power to make friends, they’ve drummed up more fear that it will be about influence.”

According to Shan Wenhua, a professor at Jiaotong University in Xi’an, Xi’s signature foreign policy is “the first major attempt by the Chinese government to take a proactive approach toward international cooperation … to take responsibility.”

Some worry expanded Chinese commercial presence around the world will eventually lead to expanded military presence. Last year, China established its first overseas military base in Djibouti. Analysts say almost all the ports and other transport infrastructure being built can be dual-use for commercial and military purposes.

“If it can carry goods, it can carry troops,” says Jonathan Hillman, director of the Reconnecting Asia project at CSIS.

China’s “maritime silk road” also pushes its strategic advantage at sea

Maritime Silk Road GLOBE

Others worry China will export its political model. Herbert Wiesner, general secretary of Germany’s PEN Center, says human rights are being “left in the ditches by the sides of the New Silk Road”.

WHERE DOES IT END?

Belt and Road is likely to continue, not least because these projects signal loyalty to Xi. The initiative has been enshrined in the Chinese communist party’s constitution, which also eliminated term limits, leaving Xi room to continue Belt and Road for as long as he wants.

It also gives disparate Chinese projects overseas the veneer of being part of a grand strategic plan, according to Winslow Robertson, a specialist in China-Africa relations. It is not a centralised initiative, so much as a brand, he says.

“Who determines what is a Belt and Road project or a Belt and Road country? Nobody is sure. Everything and nothing is Belt and Road.”

WHAT’S NEXT?

Not all of the most ambitious Belt and Road projects are about hard infrastructure. China plans to set up international courts, in Shenzhen and Xi’an, the former hub of the original Silk Road, to resolve commercial disputes related to Belt and Road.

“It’s a reminder BRI is about more than roads, railways, and other hard infrastructure,” said Jonathan Hillman, director of the Reconnecting Asia project at the Center for Strategic and International Studies in Washington. “It’s also a vehicle for China to write new rules, establish institutions that reflect Chinese interests, and reshape ‘soft’ infrastructure.”

Officials have said the courts, to be based on the judiciary, arbitration and mediation agencies of China’s Supreme People’s Court in Beijing, will follow international rules and will invite legal experts from outside China to participate.

Legal experts say the courts will likely be modelled on the Dubai International Financial Centre Courts and the International Commercial Court in Singapore, which has already struck an agreement with China to resolve Belt and Road-related disputes.

But critics of the independence of the country’s judicial system, which traditionally answers to China’s ruling communist party, worry the courts will favour Chinese parties over foreign firms.

RELATED: More from the Cities of the new Silk Road series 

Tags: 4cminewswire, 4cminews, BRI, China, Panama, Madagascar, South Africa, New Zealand, Dubai, Singapore, Beijing, Herbert Wiesner, Jonathan Hillman, Djibouti, Kyrgyzstan, Laos, Maldives, Mongolia, Montenegro, Pakistan, Tajikistan, Xi Jinping, Marshall Plan, Asia, Africa and Europe, 4CM2020JUL30,

Hashtag: #4cminewswire, #4cminews, #BRI, #China, #Panama, #Madagascar, #SouthAfrica, #NewZealand, #Dubai, #Singapore, #Beijing, #HerbertWiesner, #JonathanHillman, #Djibouti, #Kyrgyzstan, #Laos, #Maldives, #Mongolia, #Montenegro, #Pakistan, #Tajikistan, #XiJinping, #MarshallPlan, #Asia, #Africa, #Europe, #4CM2020JUL30,

Original Source: Date-stamped: 2018 JUL 30 | Author: Lily Kuo and Niko Kommenda | Article Title: What Is China'S Belt And Road Initiative? | Article Link: theguardian.com

References

1 SEE URL: https://www.morganstanley.com/ideas/china-belt-and-road
2 SEE URL: https://www.theguardian.com/world/2018/may/15/warning-sounded-over-chinas-debtbook-diplomacy

2020 MAY 24 More Countries May Fall Into China’s Debt Trap With COVID-19

WASHINGTON

A Chinese worker carrying materials for the first rail line linking China to Laos, a key part of Beijing's 'Belt and Road' project across the Mekong, in Luang Prabang, on Feb. 8, 2020. (AIDAN JONES/AFP via Getty Images)

2020 A LOOMING DEBT CRISIS

Through its Belt and Road Initiative (BRI), China has poured billions of dollars in loans into low-income countries to help build their massive infrastructure projects. And now with the COVID-19 pandemic, concern about a looming debt crisis has increased in developing nations, as most of them are already bent under massive Chinese debt.

Launched in 2013, China’s BRI, also referred to as “One Belt, One Road” or the “New Silk Road,” is one of the world’s most ambitious and controversial development programs. In recent years, the initiative has been perceived as a “debt trap,” due to Beijing’s predatory lending practices.

The BRI has contributed to the substantial external debt buildup in many low-income countries, according to a recent report by the Institute of International Finance (IIF).

Over the past two decades, China has become a major global lender, with outstanding debt exceeding $5.5 trillion in 2019—more than 6 percent of global gross domestic product, the IIF report stated.

Largest Creditor To Low-Income Countries: BEIJING
($730 billion – 112 countries)
50 percent of Chinese loans are “hidden”

The BRI has played an important role in driving China’s lending activity in recent years, making Beijing the world’s largest creditor to low-income countries. Since its launch, the initiative directed more than $730 billion to overseas investment and construction projects in over 112 countries, according to the report.

Among the BRI countries, Djibouti, Ethiopia, Laos, the Maldives, and Tajikistan are rated at “high risk of debt distress” by the International Monetary Fund (IMF), meaning they are likely to default or face problems servicing their massive debt.

In addition, a recent academic study published by the Kiel Institute for the World Economy suggests that the Chinese overseas loans may be higher than reported. The study says that up to 50 percent of Chinese loans are “hidden,” as they’re not reported to the IMF or World Bank. China’s non transparent lending practices amplify debt vulnerabilities in poor countries.

Amid a looming financial crisis, Sri Lanka is currently piling on more Chinese debt. Although the debt-ridden country must make $4.8 billion in loan repayments this year, it has reached an agreement with China for at least $1 billion in additional lending, according to Nikkei Asian Review.

Sri Lanka is often cited as a clear example of becoming trapped in Chinese debt and being forced to hand over strategic assets to China.

CCP, B.R.I. DEBT TRAPS:
Target Key logistics Assets to .

PROVIDING UNCHECKED:

CCP Commercial (and or) Military use for MOVEMENTS of:

i: PERSONNEL Civilian or Military 

ii: EQUIPMENT Commercial or Military

Already Debt Defaults has seen Chinese state-owned firm take control of:

Sri Lanka – Port of Hambantota.

Djibouti – Port of Doraleh.

A Chinese state-owned firm took control of Sri Lanka’s southern port of Hambantota in 2017 on a 99-year lease after the country defaulted on its loans.

“Ports have dual use in almost every country—for civilian use as well as for military use,” Bonnie Glick, deputy administrator of the U.S. Agency for International Development, told The Epoch Times’ American Thought Leaders program.

“And the way China has mapped out the globe, it has been very strategically looking at the most valuable ports first and approaching those countries accordingly.”

The same thing happened in the East African country of Djibouti, she noted, where China built a concessionary port. The country is located at the entrance to the Red Sea, where the United States has strong defense interests. Nearly 10 percent of the world’s oil exports and 20 percent of all commercial goods navigate through the Suez Canal, passing close to Djibouti.

“Djibouti defaulted on its loan, and China ultimately controls operations in the port in Djibouti,” Glick said, calling the BRI “One belt, one road, one-way trip to insoluble debt.”

DEBT RELIEF

Both the World Bank Group and the IMF have urged the G-20 economies including China to provide debt relief to the world’s 76 poorest countries and allow them to redirect funds toward fighting the pandemic.

China is a signatory to the debt service suspension initiative agreed to by the G-20 nations, which provides a freeze of debt repayments for the poorest nations upon request. The suspension will run from May 1 through the end of 2020.

According to Glick, the initial Chinese response to debt forgiveness was positive.

But later, “they started putting all kinds of conditions on what type of debt would be considered for debt forgiveness, carefully trying to thread the needle to keep bilateral debt owed” to China off the table, she said.

BRI’s massive construction projects are financed mainly through a wide range of Chinese local government and state-controlled institutions.

The Trump administration has voiced a hard line against China’s ambitions to grow its footprint in emerging markets, and the pandemic has amplified these concerns.

Secretary of State Mike Pompeo said the whole world is waking up to the challenges posed by the Chinese Communist Party.

“China’s been ruled by a brutal, authoritarian regime, a communist regime, since 1949. For several decades, we thought the regime would become more like us through trade, scientific exchanges, diplomatic outreach, letting them in the WTO as a developing nation,” he told reporters on May 20.

“That didn’t happen. We greatly underestimated the degree to which Beijing is ideologically and politically hostile to free nations.”

Secretary of State Mike Pompeo

Hashtags: #4cminewswire, #BRI, #XiJinping, #China, #Djibouti, #Ethiopia, #Laos, #Maldives, #Tajikistan, #4cminews, #4CM2018MAY24

Tags: 4cminewswire, BRI, Xi Jinping, China, Djibouti, Ethiopia, Laos, Maldives, Tajikistan, 4cminews, #4CM2018MAY24


Original Source: Date-stamped: 2020 MAY 24 | Author: by Emel Akan | Article Title: More Countries May Fall Into China’s Debt Trap With COVID-19 | Article Link: theepochtimes.com

2019 OCT 01 China’s Path Forward Is Getting Bumpy

 

A Chinese flag is seen at the Khorgos border crossing point.SHAMIL ZHUMATOV / REUTERS)

KHORGOS[1]Khorgas, officially known as Korgas, also known as Chorgos, Gorgos, Horgos and Khorgos, formerly Gongchen, is a Chinese city straddling the border with Kazakhstan. It is located in the Ili Kazakh … Continue reading, Kazakhstan—To better understand the future of China’s role in Central Asia, and the world, you need to come here, the middle of nowhere.

Straddling the Kazakh-Chinese border, a collection of cranes, railways, and buildings rises out of a barren stretch of desert surrounded by towering mountains to form the backbone of the Khorgos Gateway, one of the most ambitious projects in China’s Belt and Road Initiative, or BRI, Beijing’s sprawling infrastructure project. 

BEIJING – “DRY PORT”
KAZAKH TRAINS (5,000-plus-mile to) EUROPE

Beijing hopes the “dry port” here—where Chinese freight will be reloaded onto Kazakh trains to make the 5,000-plus-mile journey to Europe—will expand land-based trade across Eurasia. Beyond the logistics hub, the Kazakh project also consists of a special economic zone to attract investors to build factories and warehouses, and a free-trade border zone that aims to increase commerce with China. On the Kazakh side of the border, a purpose-built village, Nurkent, houses the area’s workers, with ambitious plans to grow it in the coming decades to complement its sister city in China, also called Khorgos, which already features shopping malls, hotels, and a population of more than 100,000.

Only in operation since 2015, the facilities are still taking shape in Kazakhstan, whose government is trying to maximize its geographic location to benefit from China’s flagship foreign-policy effort. Yet along the way, Khorgos has become emblematic of the immense promise and problems associated with the Belt and Road Initiative.

Since BRI was launched, in 2013, China has sunk hundreds of billions of dollars into ports, railways, and energy projects across Asia, Africa, and Europe. The goal is to not only expand infrastructure, including in many developing countries, but also win over local populations and governments by funnelling investment, jobs, and economic growth in their direction.

The path forward has been bumpy, though.

Questions regarding the commercial value of certain projects and concerns over the initiative being a backdoor for more sinister geopolitical ambitions have undercut Beijing’s official rhetoric of “win-win” cooperation and illustrated the uncertainty surrounding its plans.

As Beijing marks the 70th anniversary of the founding of the People’s Republic of China, questions over the implementation of BRI are among several facing the country regarding the limits of its power—from protests in Hong Kong to the escalating trade war with the United States.

“There is a reason that lots of these gaps in global infrastructure that China is trying to fill exist in the first place,” Andrew Cainey, a China expert and an associate fellow at Chatham House, a London-based think tank, told me. “It’s because they are not so commercially appealing.”

.

■  □ ■  □ ■  □ ■  □ ■  □ ■  □ ■  □

.

• EXPECTATIONS
• SUBSIDIES
• WASTE & FRAUD

This tension—between the expectations surrounding BRI and the challenges of fulfilling them—is on display here in Khorgos. The project has posted impressive overall growth numbers, and Kazakh officials are keen to talk up plans to develop the area. The dry port processed 44 percent more cargo, as measured by so-called 20-foot-equivalent units, in 2018 compared with the previous year, according to data provided by the authorities here. Kazakh officials were also keen to point to the area’s potential for growth.

A 2017 study commissioned by the International Union of Railways estimated that trade volume between China and Europe via rail would increase sharply over the next decade, with Kazakhstan becoming the key crossroads.

Similarly, officials mentioned new investments from Chinese companies to build facilities and factories in the special economic zone on the Kazakh side as a sign of the area’s growth.

Khorgos is about turning Kazakhstan into Central Asia’s transit hub,” Nurlan Toganbayev, the director of the commercial department at the KHORGOS GATEWAY, told me. “We know this is no easy task, but we’re growing, and we take great pride in that.”

Yet even these touted successes point to future problems for the project.

Rail transport is still only a small percentage of global trade; sea and air routes, which are cheaper and faster, respectively, form the bulk of goods moved between China and Europe.

The land route has also been criticized for waste and fraud.

Many of the cargo containers returning by rail from Europe to China through Kazakhstan are empty, officials admit, due to a trade imbalance, but the problem may run even deeper.

The Chinese government provides significant subsidies to encourage use of the rail links, and a recent report by the Chinese Business Journal found that many exporters transported empty containers from China to Europe just to receive those subsidies.

China Railway, the government operator of the rail line, admitted to the state-run Global Times that the problem existed, but said that it has been eradicated. Not only does the episode illustrate the commercial limits of large-scale shipping by train, but it calls into question the viability of the Khorgos project.

These concerns may be part of a broader pattern.

CORRUPTION

Beijing has “zero tolerance”

At the second annual Belt and Road Forum, in April, the Chinese leader Xi Jinping signalled that his government would move to tighten oversight of the opaque network of infrastructure projects that makes up BRI and discussed taking on more high-quality and sustainable deals, saying that Beijing had “zero tolerance” for corruption.

This came on the heels of several instances that have sullied the initiative’s brand. The $62 billion CHINA-PAKISTAN ECONOMIC CORRIDOR has been scaled back amid Pakistan’s increasing debt problems, while a major port deal in Myanmar was slimmed down from roughly $7 billion to $1.3 billion.

A port in Sri Lanka garnered global headlines after the government couldn’t repay its loans and granted a state-owned Chinese company a 99-year lease on the port as a form of debt relief.

Elsewhere, projects have been tarnished by corruption: 

China has built a sprawling Surveillance State and Internment-Camp System up to 2 million people

The new Malaysian government renegotiated a major rail project at a significantly reduced cost and cancelled $3 billion worth of plans to build new pipelines following a graft scandal. The Maldives is seeking debt forgiveness following corruption allegations connected to Belt and Road projects green-lit by its previous government.

These scandals come as a slowing Chinese economy could lead to a more cautious approach to investment in the future. According to Cainey, from Chatham House, Beijing is still fine-tuning BRI and trying to learn from a spree of large-scale projects in countries with poor governance and weak rule of law.

“The Chinese have taken the same approach they took at home, where they have lots of experience managing the risks of large infrastructure projects,” he told me, “but as they are now seeing, things work differently overseas.” 

China has become the largest investor in Central Asia, and its patronage has been embraced by local governments, especially in Kazakhstan, where Xi announced BRI in 2013. But China’s expansion also stirred fears among everyday citizens of vassalage[2]a position of subordination or submission (as to a political power). to Beijing.

Concerns over China’s intentions are not new, but they have increased as its economic footprint has deepened. These worries have grown in recent years, as China has built a sprawling surveillance state and internment-camp system to target its Muslim population: mostly Uighurs, but also ethnic Kazakhs, Kyrgyzs, and other groups in its western Xinjiang region, which shares a 1,100-mile border with Kazakhstan.

It’s unclear how many people are in some sort of detention, but the U.S. State Department estimates that 800,000 to 2 million people have been detained since 2017.

.

■  □ ■  □ ■  □ ■  □ ■  □ ■  □ ■  □

.

In Zharkent, a Kazakh city of about 33,000 people that sits 22 miles from the Khorgos Gateway, this reality is on display.

The city was the site of the high-profile trial of Sayragul Sauytbay, an ethnic Kazakh Chinese national who worked in the camps and then fled to Kazakhstan because she feared internment herself. Sauytbay became a local celebrity for her firsthand testimony about China’s camps when she was tried for crossing the border illegally through the Khorgos free-trade zone. (She was granted asylum in Sweden in June.)

The internment camps also overlapped with the broader Khorgos project in December 2017, when Askar Azatbek, a former Xinjiang official who became a Kazakh citizen, was allegedly taken from the Kazakh side of the free-trade zone to China, where he has since been detained.

“China is trying to win hearts and minds,” Philippe Le Corre, a nonresident senior fellow at the Carnegie Endowment for International Peace who studies China’s global rise in Europe and Eurasia, told me, “but it’s an almost impossible task when you look at what’s happening to the Muslims of China.”

.

■  □ ■  □ ■  □ ■  □ ■  □ ■  □ ■  □

.

Markets and bazaars in Zharkent are full of Chinese goods, and rumors of Chinese encroachment are prolific in trading stalls and tea houses. But criticizing China publicly is still a sensitive topic in authoritarian Kazakhstan, and during a recent visit, many people were wary of speaking on the record.

Alexander, a resident of Zharkent who gave only his first name, told me that he makes his living shuttling Chinese goods, and that there has been a change of attitude in recent years when locals interact with Chinese merchants and officials. “They look down on us now,” he said. Another man, Bolat, told me he feels that grand projects like Khorgos bring “no benefit to the local community.”

Still, despite limited goodwill for China and various difficulties with its marquee Belt and Road projects, developments like Khorgos hold too much symbolic political value for China and Kazakhstan to be allowed to fail. Beijing has fuelled its global infrastructure push with subsidies and investments, but as China enters a new phase shaped by tighter budgets and oversight, Khorgos and other BRI projects may need to adapt.

“There are lots of local people that would like for Khorgos to be a success story,” Le Corre said. “But given everything else going on at the moment, it’s becoming more difficult for China to sell this new Silk Road.”

Original Source: Date-stamped: 2019 OCT 01 | Author: by Reid Standish  | Article Title: The Khorgos Gateway was once touted as one of the most ambitious projects in the Belt and Road Initiative, but it has come to represent the limits of Beijing’s global push. | Article Link: theatlantic.com


Hashtags: #4cminewswire, #BRI, #XiJinping, #China, #KhorgosGateway, #Malaysia, #Maldives, #SriLanka, #Kazakhstan, #Pakistan,  #Uighurs, #Kazakhs, #Kyrgyzs, #4cminews, #4CM2019OCT01

Tags: 4cminewswire, BRI, Xi Jinping, China, Khorgos Gateway, Malaysia, Maldives, Sri Lanka, Kazakhstan, Pakistan,  Uighurs, Kazakhs, Kyrgyzs, 4cminews, #4CM2019OCT01


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References

1 Khorgas, officially known as Korgas, also known as Chorgos, Gorgos, Horgos and Khorgos, formerly Gongchen, is a Chinese city straddling the border with Kazakhstan. It is located in the Ili Kazakh Autonomous Prefecture of the Xinjiang Uyghur Autonomous Region. SEE URL: https://en.wikipedia.org/wiki/Khorgas
2 a position of subordination or submission (as to a political power).

2018 DEC 18 BRI equals China Using ‘Debt Trap’ Diplomacy to Seek Hegemony (Control)


A Chinese site engineer is seen on site as the extension of the Southern Expressway from Matara to Hambantota continues under construction near Hambantota, Sri Lanka, on Nov. 16, 2018. (Paula Bronstein/Getty Images)Through its Belt and Road initiative (BRI), China is pouring billions of dollars into emerging countries to help build massive infrastructure projects. Many of these projects, however, are financed through Chinese state-controlled lenders, leaving some nations distressed by debt burdens and putting their sovereignty at risk.

BRI, also known as One Belt, One Road, is one of the world’s most ambitious development programs, spanning almost 70 countries and covering more than two-thirds of the world’s population. It was first proposed by Chinese leader Xi Jinping in 2013.

The Chinese Communist Party has made the initiative a centerpiece of its plans to grow its geopolitical influence. The initiative aims to deliver trillions of dollars of investment for a vast network of transportation, energy, and telecommunications infrastructure linking Asia, Europe, and Africa.

BRI’s massive construction projects are financed mainly through a wide range of Chinese local government and state-controlled institutions. In recent years, however, the initiative has been perceived as a “debt trap,” raising the risk of economic distress in borrower countries, particularly in Central and South Asia.

The issue of whether Beijing is pursuing “debt diplomacy” through this initiative has sparked a new international debate, as well. Contrary to its promises to deliver prosperity to the local people in host countries, China is playing a zero-sum game, according to critics.

Jeff Smith, an expert on South Asia at The Heritage Foundation, says some BRI deals are a one-way street. Speaking on a panel hosted by the foundation, he said that participating nations accumulated large sums of debt owed to Chinese financial institutions and were stuck with high-interest rates.

In addition, Chinese contractors grab the lion’s share of the construction of many infrastructure projects. Participating nations compensate Chinese firms by using Chinese materials and workers.

According to a study by Center for Strategic and International Studies, out of all the contractors participating in Chinese-funded projects, 89 percent are Chinese companies. That’s in contrast with projects funded by multilateral development banks that typically use almost 40 percent local contractors.

Malaysian Prime Minister Mahathir Mohamad called the initiative a “new colonialism” to express his unease about China’s growing political and economic influence in the region.

GEOPOLITICAL RETURN

Westerns countries have raised concerns about Beijing’s ambitious international-development plan, because of issues that include lack of standards, transparency, and accountability in construction deals. According to Smith, these deals have facilitated corruption and nepotism, and undermined existing lending practices and international standards.

The hundreds of billions invested in these countries haven’t produced any economic returns; Beijing is mainly seeking geopolitical returns, which has inflated the debt risk.

“There are certainly questions about financial sustainability and a risk of debt distress” for countries participating in BRI, said Smith.

According to the research firm RWR Advisory Group, 270 BRI infrastructure projects (or 32 percent of the value of the total projects) have been put on hold because of financial concerns. And the sovereign debt of 27 BRI participant countries is regarded as “junk” by the rating agencies, while another 14 have no rating at all.

Countries such as Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, and Pakistan are in serious trouble, according to Smith.

Pakistan’s external debt payment, for example, will surge by 65 percent next year. Meanwhile, its foreign-exchange reserves have fallen by 40 percent over the past two years.

“That is unsustainable,” Smith said.

HUMAN-RIGHTS ABUSES

The debt trap diplomacy has also allowed China to expand its human-rights abuses. There is an increase in harassment of Chinese dissidents abroad, the arrests of foreigners in China, and a crackdown on academic freedom. And China has been using its economic and political influence in the region to silence critics.

Smith said that most China experts will say there’s been a shift over the past decade in not just China’s foreign policy but also its domestic policy toward becoming a more assertive nation, and “in some ways, a more aggressive nation at home.”

“[BRI], as an extension of Chinese influence, has amplified some of these concerns and served as a proxy for some of these concerns,” he said.

The Trump administration has been a vocal critic of BRI and China in the past two years; it has been particularly concerned about the rising debt crisis in the Asia-Pacific region.

Treasury Secretary Steven Mnuchin earlier warned of the looming financial crises in the region and pointed to China, calling it a “non-transparent emerging sovereign creditor.”

The issue was also raised at the G-20 summit in Buenos Aires and the world leaders agreed to take steps to address “debt vulnerabilities in low-income countries.”

“We will work towards enhancing debt transparency and sustainability, and improving sustainable financing practices,” said the statement.

The G-20 countries also called on “the IMF and World Bank to work with borrowers and creditors to improve the recording, monitoring, and transparent reporting of public and private debt obligations.”


Original Source: Date-stamped: 2018 DEC 18 | Author: Emel Akan | Article Title: China Uses ‘Debt Trap’ Diplomacy to Seek Hegemony | Article Link: theepochtimes.com

Hashtags: #4cminewswire, #BRI, #XiJinping, #China, #Djibouti, #Kyrgyzstan, #Laos, #Maldives, #Mongolia, #Montenegro, #Pakistan, #4cminews, #4CM2018DEC18

Tags: 4cminewswire, BRI, Xi Jinping, China, Djibouti, Kyrgyzstan, Laos, Maldives, Mongolia, Montenegro, Pakistan, 4cminews, #4CM2018DEC18