CHINA is “colonising” smaller countries by lending them massive amounts of money they can never repay, it’s been claimed.The country is accused of leveraging massive loans it holds over small states worldwide to snatch assets and increase its military footprint.Developing countries from Pakistan to Djibouti, the Maldives to Fiji, all owe huge amounts to China.Already there are examples of defaulters being pressured into surrendering control of assets or allowing military bases on their land.
Some are calling it “debt-trap diplomacy” or “debt colonialism” – offering enticing loans to countries unable to repay, and then demanding concessions when they default.
Sri Lanka provided a prime example last year.
Owing more than $1billion (£786million) in debts to China, Sri Lanka handed over a port to companies owned by the Chinese government on a 99-year lease.
And Djibouti, home to the US military’s main base in Africa, also looks likely to cede control of a port terminal to a Beijing-linked firm.
America is eager to stop the Doraleh Container Terminal falling into Chinese hands, particularly because it sits next to China’s only overseas military base.
Last March ex-Secretary of State Rex Tillerson said Beijing encouraged “dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty”.
A report from The Center for Global Development offers some insight into the spreading China debt.
It shows how infrastructure project loans to the likes of Mongolia, Montenegro and Laos have resulted in millions or even billions in debts, which often account for huge percentages of the countries’ GDPs.
Many of these projects are linked to the “Belt and Road” initiative – a bold project to create trade routes through huge swathes of Eurasia, with China at the centre.