This Is Why There Is “Limited Evidence” For Debt Trap Diplomacy By China

International port in Sri Lanka with boat
Credit: Xinhua Net

A research paper published by Chatham House has, among other things, debunked claims of China’s debt-trap diplomacy, especially through its BRI initiative in Africa. 

The research challenges  the ‘BRI debt-trap diplomacy’ claim by suggesting that “economic factors are the primary driver of current BRI projects; China’s development financing system is too fragmented and poorly coordinated to pursue detailed strategic objectives; developing-country governments and their associated political and economic interests determine the nature of BRI projects on their territory.” 

Counteracting Sri Lanka and Malaysia cases, the two most widely cited ‘victims’ of debt-trap diplomacy, the paper stated that “the most controversial BRI projects were initiated by the recipient governments, which pursued their own domestic agendas. Their debt problems arose mainly from the misconduct of local elites and Western-dominated financial markets. China has faced negative reactions and pushback in both countries, though to a lesser extent than is commonly believed, given the high-level interests at stake in the recipient countries.”

The findings of the research has also admonished governments doing business with Beijing to be ‘smart’ and responsible. Thus, “recipient governments must take greater responsibility for the evaluation of potential projects to ensure their viability and financial sustainability. They must also develop their ability to bargain with Chinese partners to make certain that local people benefit from the BRI. Since China continues to place great emphasis on host-country regulation, BRI partners must bolster their laws and regulatory environment.”

Civil society and political opposition groups in recipient countries have also been urged to focus their efforts on demanding transparency and public participation around the design, feasibility, selection, pricing, tendering, and management of megaprojects.

Over the years allegations of China’s malign geopolitical intentions in Africa captured in the phrase, ‘Debt-Trap’ and has become very popular. For example, the possibility of Nigeria “losing” its sovereignty to China over bad debts recently became a hot ‘Chinese debt-trap diplomacy in Africa’ topic. But Nigeria’s Transport Minister confidently assured that “the Chinese would not take over assets that were not constructed with the money, in case of default. And should the asset depreciate; then the country can discuss other assets they can take over to recoup the loans.”  

Like this recent Chatham House published research, many other reports have surfaced to water down the claims of African countries becoming debt-distress, risking national assets, and even ceding sovereignty to China. For instance, Quartz Africa has reported that Zambia never lost some of its national assets to China. 

Nevertheless, aside from the rhetoric, shouldn’t African countries be genuinely concerned about their debt to China? How can they safely escape a ‘debt-trap’, if indeed there is one?

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