International Chinese Debt-Trap Diplomacy: Xi Jinping's Belt and Road Initiative Turns 10 Years Old
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i thought the saudis control Egypt...
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Tonga to start paying back controversial Chinese loans described by some as 'debt-trap diplomacy'
By Pacific affairs reporter Liam Fox | 19 Jul 2018
The loans were used in part to rebuild the capital's CDB after riots in 2006.
Key points:
- Two-thirds of Tonga's $240 million external debt is owed to China's Exim Bank
- China granted an extension to the loans' grace period but refused to convert them into a grant
- Tonga's Chinese debt is held up by some as a prime example of China's debt-trap diplomacy
The Tongan Government will soon begin making repayments on controversial Chinese loans that critics have said saddled the small Pacific nation with unsustainable debt.
Tonga's Prime Minister Akilisi Pohiva recently confirmed his Government would start to repay the principal on two loans worth around $160 million from China's Export Import Bank.
The loans from 2008 and 2010 were used, in part, to rebuild the central business district in the capital Nuku'alofa after riots in 2006.
Mr Pohiva told a press conference last week that his Government would continue to ask China to waive the debt.
China did grant a five-year extension to the loans' grace period but so far has refused the request to convert them into a grant.
Tonga is still recovering from the impact of Tropical Cyclone Gita which struck the main island of Tongatapu in February and caused about $210 million worth of damage, equivalent to nearly a third of the country's gross domestic product (GDP).
In this year's budget the Government said much of its efforts would be focused on recovery and reconstruction.
Tonga held up as example of China's 'debt-trap diplomacy'
The budget papers put Tonga's total external debt at about $240 million dollars — that's 41 per cent of GDP. Nearly two-thirds of that is owed to China's Exim Bank.
Principal repayments on the two loans will see the Government's foreign debt repayments double to $15.6 million this financial year.
That's more than the $11 million dollars the Government has budgeted for post-cyclone reconstruction work.
"But certainly, they can't say no-one warned them that this day would come."
Tonga's Chinese debt is held up by some as a prime example of what's been called China's debt-trap diplomacy in the Pacific region.
Australia's Foreign Minister Julie Bishop is among those to voice concerns about the potential for unsustainable debt burdens to erode the sovereignty of Pacific Island nations.
But there is also criticism of the previous Tongan government that took on the loans and its management of the funds.
"Money was left over, it got put towards renovating the Royal Palace in Tonga which definitely gives no return to Tonga as a whole," Dr Smith said.
Dr Smith said he believes Tonga's handling of the Chinese loans should serve as a warning to other Pacific Island nations.
"How well Chinese aid is used comes down to the state of governance in the recipient country, and if your recipient country isn't able to handle the money sensibly or in a transparent way, then you get problems like this," he said.
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Tonga urges Pacific nations to press China to forgive debts as Beijing defends its approach
By Pacific affairs reporter Stephen Dziedzic | August 15, 2018
By Pacific affairs reporter Stephen Dziedzic | August 15, 2018
The leader of Tonga has called on Pacific Island leaders to band together and press China to write off their debts, saying his small nation is suffering "serious" debt distress.
The calls come as Beijing defended its spending program in the Pacific in a statement to the ABC as "sincere and unselfish" while arguing that it only provides loans to those who can afford it.
Several Pacific nations have taken on large loans from China, as well as from multilateral institutions.
Tonga confirmed last month it would start to pay back two loans worth around $160 million from China's Export Import Bank.
This morning Tonga's Prime Minister Akalisi Pohiva told the ABC the repayments would put pressure on his small country.
"It has become a serious issue. We have debt distress," he said.
But Mr Pohiva said Tonga wasn't the only Pacific Island nation which owed substantial amounts to China — and the region should collectively urge Beijing to waive repayments.
"It is no longer an individual issue for countries to consider. It has become now an issue for all countries who have loans from China," he said.
"I think these small countries will eventually come together to find a way out."
Pacific leaders urged to present united front against China
Akalisi Pohiva says Beijing would be more likely to listen if Pacific leaders presented a united front.
Pacific leaders will meet in Nauru next month for the Pacific Islands Forum (PIF) — and Mr Pohiva said he wanted to use the Forum to tackle the issue.
While there had been plenty of internal back and forth within Pacific nations over debt, raising the topic at PIF would represent a significant escalation.
But Mr Pohiva said Beijing would be more likely to listen if Pacific leaders presented a united front and asked for debt relief.
"China will not make a decision on individual requests," he said.
Mr Pohiva first publicly raised the prospect of PIF discussing debt in an interview with the Samoa Observer last week, after a meeting of Pacific foreign ministers.
He said it was too early to predict if other nations would agree to discuss Chinese debt at PIF. "But some of these countries have already thought about it, and there have already been discussions by these countries outside formal meetings," the Prime Minister said.
Beijing defends its 'sincere and unselfish' spending
Julie Bishop arrives at Nago Island in Papua New Guinea with PNG Foreign Minister Rimbink Pato (red shirt).
China's lending of hundreds of millions of dollars across the Pacific has also concerned the Turnbull Government, which warned the arrangements would erode the island nations' sovereignty.
"We recognise we're not the only partner, but we would like the Pacific to see Australia as providing them with the kind of support that maintains their sovereignty, maintains their economic stability and doesn't become an unsustainable debt burden," Ms Bishop told Fairfax last month.
There is also criticism of the previous Tongan government that took on the loans and its management of the funds.
Responding to questions from the ABC, the Foreign Ministry said China's aid was aimed at "improving people's lives" and "economic development".
"In general, China would prolong the term of payment when it is necessary."
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Fixed.
I call for regicide. Only when princes and paupers are punished the same can we get really good governance.
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Tonga urges Pacific nations to press China to forgive debts as Beijing defends its approach
By Pacific affairs reporter Stephen Dziedzic | August 15, 2018
Forgive??? That's not how loan works...Do Pacific Islanders even geopolitics?
Where's the leklok account?
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The new account is NZbetterthanOZ
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The best financial lessons are the ones that you paid dearly for.
I'm not sure if we can call that a tragedy or comedy, to be honest. They all have been warned, and still jumped head-first into the debt trap.
It's Russia lol.
Naw, China is taking over.
Look at the largest oil companies in your country and tell me how many are not owned by China.
Who's the largest non-oil energy producer in the world?
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Nah, people wanted WWI, granted not the whole world, but people did want it
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You're in the wrong thread, and definitely quoted the wrong post.
Actually, you should just head to Wikipedia if you need to learn elementary knowledge like that about the oil market, and leave this discussion to those who can stay on the topic of Debt Trap Diplomacy.
Anyway, I'm in a good mood today, so consider this a favor: https://en.wikipedia.org/wiki/List_of_largest_energy_companies
You made that up. That can't be a real term. You copy and paste guru you.
"Debt trap diplomacy"?
Is that a Wikipedia source?
China has been buying up huge oil companies for years. I'm staying on topic of China owning more of our resources than we do.
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Win what? They're a fucking hype job.
http://forums.sherdog.com/threads/the-u-s-china-trade-war-mega-thread.3810809/
Non-Stop L's.
Keep telling yourself that and they'll keep winning.
China owns companies that have rights to most of the large oil reserves in North America and Europe, and they'll get the rest.
Just by offering the board of said companies huge payouts.
D
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Confessions of an Economic Hitman has been out for decades. It’s really intriguing, though I don’t know for sure how real everything is.Beijing may be late to the colonial investment game, but they're executing this tried & proven strategy beautifully in countries that are a bit behind on the subject of World History.
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Sri Lanka the latest victim of China’s debt-trap diplomacy
Beijing has been given a 99-year lease on Hambantota port as part of a debt-reduction deal
By Brahma Chellaney | December 24, 2017
Hambantota port in Sri Lanka has been taken over by China for 99 year
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’s Belt and Road Initiative (BRI) – which President Xi Jinping calls the “project of the century” – and proof of just how effective China’s debt-trap diplomacy can be.
Unlike International Monetary Fund and World Bank lending, Chinese loans are collateralized 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 favorable access to their natural assets, from mineral resources to ports.
Moreover, as Sri Lanka’s experience starkly illustrates, Chinese financing can shackle its “partner” countries. Rather than offering grants or concessionary loans, China provides huge project-related loans at market-based rates, without transparency, and often little or no environmental- or social-impact assessments. As US Secretary of State Rex Tillerson said recently, with the BRI, China is aiming to define “its own rules and norms.”
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 $436 million from cash-strapped Greece last year, will serve as the BRI’s “dragon head” in Europe.
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, including expanding its diplomatic influence, securing natural resources, promoting the international use of its currency, and gaining a relative advantage over other powers.
China’s predatory approach – and its gloating over securing Hambantota – is 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 1839-1860 Opium Wars and ended with the 1949 communist takeover – a period that China bitterly refers to as its “century of humiliation.”
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-style neocolonial arrangements. Apparently Xi’s promise of the “great rejuvenation of the Chinese nation” is inextricable from the erosion of smaller states’ sovereignty.
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. This gives China added leverage, which it can use, say, to force borrowers to swap debt for equity, thereby expanding China’s global footprint by trapping a growing number of countries in debt servitude.
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’s landmass to expand by 90%. Yet the 99-year term was fixed merely to help China’s ethnic-Manchu Qing Dynasty save face; the reality was that all acquisitions were believed to be permanent.
Now, China is applying the imperial 99-year lease concept in distant lands. China’s lease agreement over Hambantota, concluded this summer, including a promise that China would shave $1.1 billion off Sri Lanka’s debt. In 2015, a Chinese firm took out a 99-year lease on Australia’s deep-water port of Darwin – home to more than 1,000 US Marines – for $388 million (A$506m).
Similarly, after lending billions of dollars 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 – the only permanent American military facility in Africa. Trapped in a debt crisis, Djibouti had no choice but to lease land to China for $20 million per year. China has also used its leverage over Turkmenistan to secure natural gas via a pipeline largely on Chinese terms.
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’s crushing debt to China now threatens to turn its busy port of Mombasa – the gateway to East Africa – into another Hambantota.
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’s velvet glove cloaks an iron fist – one with the strength to squeeze the vitality out of smaller countries.
http://www.atimes.com/article/sri-lanka-latest-victim-chinas-debt-trap-diplomacy/
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Read through that thread front-to-back and see all the winning China's been up to. If that's winning, I can't wait to see what losing looks like when the kid gloves come off.
Which US shale formations do they have the rights to? They've been failing for decades to raise a domestic semiconductor industry and can't even buy their way into the game because the US, South Korea, Japan and Taiwan hold 90% of the global market and every attempted acquisition of American firms is getting blocked on grounds of national security.
They don't have the modern culture or environment to innovate anything, they aren't nurtured to think in the abstract scientifically, it's all rote. In fact, their retardedly rigid social/political system and homogeneous Han dream actively works to inhibit that.
Ok.
I guess we'll agree to disagree and just watch.
I don't even want to come back here to say I told you so, because I hope I'm wrong.
