23 C
Kenya
Saturday, August 15, 2020

Is China using debt to colonize poor countries?

Must Read

See List: Top 10 highest paid CEOs in Kenya and their salaries

Highest Paid CEOs in Kenya: Some of Kenya's chief executive officers take hundreds of millions in salaries every year....

Nairobi salons now selling, weaving hair extensions from dumpsites

BY REUTERS: Stylist Julia Wanja picks her way delicately through piles of food waste, discarded masks, rubber gloves and...

Escrow Kenya launches free online marketplace for SMEs

Escrow Kenya has announced the launch of a free-for-all online marketplace in Kenya targeting small business owners looking to...

China’s Debt Colonialism: 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 bas in Africa, also looks likely to cede control of a por 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”.

Chinese tourists flock to Scotts chippy North Yorkshire after then president Jinping visiting with PM David Came in 2015.

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, whic often account for huge percentages of the countries’ GDPs.

Many of these projects are linked to the “Belt an Road” initiative – a bold project to create trade routes through huge swathes of Eurasia, with China at the centre.

Debt-ridden Sri Lanka’s Hambantota port, which China recently seized control of
Participating countries often undertake work on roads and ports with part-funding from China.

More recently, China’s debt empire has been rearing its head in the Pacific, prompting fears th country intends to leverage the debt to expand it military footprint into the South Pacific.

Beijing’s creation of man-made islands in the disputed South China Sea for use as military bases suggests the concern may be warranted.

In April China made these intentions more obvious – approaching Vanuatu about setting up military base.

Australia expressed alarm at this move, which would effectively increase Chinese military presence on a key gateway to Australia’s east coast, The Times reports.
Vanuatu owes £191million to China, according to one think tank .

Among the projects this money funded was the largest wharf in the South Pacific – considered capable of accommodating aircraft carriers.

Tonga also carries some big debts and has already admitted to struggling with repayments.

Tongan PM Akilisi Pohiva said on Wednesday tha he was concerned Beijing was preparing to seize assets from his country.

He urged other Pacific islands to join voices in calling for loan write-offs. Two loans from China’s Export Import Bank totalling more than £91million equal a quarter of the country’s GDP.

He told Australia’s ABC : “It has become a serious issue. We have debt distress.”
Pohiva said with China debt becoming so prolific, it was no longer a problem to be dealt with individually.

He added: “I think these small countries will eventually come together to find a way out.” China defended its lending practices, saying they were “sincere and unselfish”, and insisting it only lent to countries that could repay.

Tonga is one among a list of South Pacific countries that have taken on debt in recent years.

Sydney’s Lowy Institute think tank, which has closely monitored China’s activities in the Pacific, estimates Beijing has poured nearly £1.4billion into Pacific countries since 2006.

Other big debtors include Papua New Guinea, which owes roughly £498million in development and aid debt, Fiji, which owes £496million, and Samoa, with debt of £181million.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

180,544FansLike
11,005FollowersFollow
153FollowersFollow
277SubscribersSubscribe
WhatsApp
Telegram

Latest News

Equity Partners With Merchants To Push Contactless Payments

Equity Cards Discounts Customers get a 10% discount on purchases at Dignity collection on Equity cards. Equity...

You can no longer borrow below Sh. 2,000 on M-Shwari

MShwari Limit: Safaricom and the NCBA Bank have raised the minimum threshold that customers can borrow on Mshwari to Sh. 2,000. Subsequently, borrowers of...

Pain of finding out my hubby was a garbage collector not JKIA employee

Imaging finding out that your spouse is a garbage collector while all along you have believed he is a JKIA employee? Well, this is...

KCB half year profit falls by Sh. 5.2 billion as corona bites

2020 KCB Half Year Profit: The Kenya Commercial Bank has become the first local lender to post a profit drop in the midst of...

Esther Wakaba: I was a multi-millionaire, but today I live in a slum

Land Disputes in Kenya: Falling from the grace to grass is one of the most humiliating experiences that one can suffer in life. In...

More Articles Like This