According to one analysis, China attracts economically vulnerable countries by lending them funds and then leaving them with no way to get out of debt or make ends meet for their citizens. The recent target of China’s debt trap was Sri Lanka, whose crisis was caused by a combination of unfortunate circumstances and reckless decisions by the authorities, however, a big role in this scenario was also played. by China, with its position as one of the world’s leading bilateral creditors, Asian Lite International reported.
China has been embroiled in Sri Lanka’s geopolitical scenario since the disastrous civil war of the early 2000s. However, more often than not Beijing’s aid has been accompanied by sinister motives. For example, the infamous Hambantota port project that China pushed and paid for had zero viability to begin with – a factor the creditor giant was well aware of. Using Colombo’s inability to make payments, China acquired majority stakes in a massive project strategically located on foreign soil. Beijing’s method of securing a monopoly in South Asia has been driven by large loans to the region, using the countries as pawns to advance its own geopolitical agenda of increased international influence and takeover.
And according to recent research, Pakistan and Laos are likely to follow in Sri Lanka’s footsteps. In-depth information on these economies reveals that these countries are approaching the economic state that Sri Lanka was in, prior to the default – having minimal funding available to them from external creditors and large debt financing which are a matter of concern beyond all other Asian borders. markets. In the case of Laos, which is hot on the heels of Sri Lanka’s economic ruin, is also on the brink of financial collapse and in default. The country’s inflation has peaked at 23.6 percent, while its total debt has reached a colossal $14.5 billion, which the country cannot hope to repay anytime soon, Asian Lite International reported.
China, being Laos’ financial backer, had made an investment of at least $16 billion and the fact is that the majority of the projects that China undertakes involve large-scale infrastructure that the country does not need. . Laos’ ambitions to become the center of trade and infrastructure have left it investing in the construction of railway lines and hydroelectric power stations that serve no purpose for the country, which ultimately led to back breaking. of the country in its attempts to repay its loans. .
For small countries with big aspirations, China’s debt traps are setting in with a little nudge in the right direction. Ultimately, when the country reaches the brink of default with its inability to repay its loans, the dragon rushes to take control of national assets instead of repayment. Pakistan, China’s biggest backer and ally, has often been bailed out by Beijing in times of fiscal crisis. China has been providing emergency loans to Islamabad for balance-of-payments purposes since 2017, when Pakistan struggled with international debt overhang and rising import costs. Since then, China has maintained its role as the savior of the Islamic State and has lent $21.9 billion in short-term loans over the past four years, according to Asian Lite International.
China’s “all-weather” friend Pakistan is facing a difficult economic and political situation. And Pakistan’s tumultuous economic climate makes it impossible for the country to make payments on those loans that are doled out, further deepening Islamabad’s fall into Chinese debt traps. Pakistan is facing even tougher times as the substantial projects under the China-Pakistan Special Economic Corridor (CPEC) have left Pakistan vulnerable to being crushed by new loans disbursed to the country which it cannot hope to repay.
In addition, infrastructure projects under the CPEC in the country have collapsed, having generated no investment or income. Once touted as the partnership’s flagship project, Gwadar Port has caused more trouble than it’s worth. After coming to light following massive protests, the $46 billion project connects the port of Gwadar in Balochistan to China’s Xinjiang province via the Arabian Sea. The vicious cycle only mixes money from one source to another, without solving the underlying debt problems. Ultimately, South Asian countries that choose to depend on China fall even further into a debt trap, with no way out. (ANI)
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)