BRI’s transformative potential extends beyond economic development. It has the power to reshape global trade routes and reduce dependence on US-led frameworks including international financial institutions like the World Bank and IMF.
Priyanka Garodia
China’s quest to enhance its power on a global scale has been a national priority in recent times. The Belt and Road Initiative (BRI) is a global development project that stands as a testimony to its ambitiousness across Asia, Europe, and Africa. Aimed at enhancing connectivity and trade through investments in energy, transportation and communication, the BRI has allowed China to be seen as a key player in global development. The project has come with its own set of controversies of which the accusation of practising ‘debt-trap diplomacy’ has been aggressively projected by the Western media and policy makers. The prime allegation is that China acts as a predator by luring developing nations into unsustainable debt through bad lending practices that aims to seize assets when nations default on repayment. Is this claim based on facts or is it a carefully crafted narrative to counter China’s phenomenal geopolitical rise?
The debt-trap narrative, while widely circulated, seems to be exaggerated or misconstrued, serving specific geopolitical purposes. The United States, in particular, has employed this discourse to paint China as a villain on the global stage, aiming at stifling its economic rise. This portrayal is deeply tied to China’s distance from Western institutions and its emergence as an alternative to the Bretton Woods order. With this context, it becomes critical to unpack the ‘debt-trap diplomacy’ narrative and examine its origins and validity.
Where Did it Come from?
The phrase “debt-trap diplomacy” was conceptualized by the Indian academic Brahma Chellaney before it gained traction in the Western discourse. It describes a strategy wherein a creditor nation offers excessive loans to a borrower nation, fully aware that the borrower may struggle to repay. According to it, when defaults occur, the creditor gains control over critical infrastructure or strategic assets.
This term has been amplified by the US-based media outlets and research organizations, such as the Hoover Institution in recent times, when addressing China’s global economic aspirations and has come to be seen as a smear campaign in response to China’s global rise.
Multiple reports and think-tank publications have scrutinized China’s lending practices, often citing specific projects as evidence of its ‘predatory’ behaviour. However, these narratives frequently lack nuance as they simplify complex economic and geopolitical relationships into a binary of victim and aggressor. China’s overall silence and a lack of information on it has only added fuel to the fire. Two examples that have been widely circulated to consolidate this argument are Sri Lanka and Pakistan.
Sri Lanka’s Hambantota Port has been used as a quintessential example of China’s alleged debt-trap diplomacy. Critics argue that China’s loans for the port’s development saddled Sri Lanka with unsustainable debt, ultimately leading to the transfer of a 99-year lease to a Chinese company in 2017. However, upon a closer study, it can easily be seen that the majority of Sri Lanka’s external debt was owed to private lenders and multilateral institutions, not China. Furthermore, the decision to lease the port was a sovereign choice made by the Sri Lankan government to address its financial difficulties, one that China did not impose on the nation.
Similarly, the China-Pakistan Economic Corridor (CPEC) has faced criticism for allegedly burdening Pakistan with insurmountable debt. The truth is that Pakistan’s economy has been faltering for years, which predates CPEC, having amassed an external debt of $30.35 billion over the years, mostly owed to Saudi Arabia, UAE and China. The CPEC loans are structured in a manner that it is a huge investment for building Pakistan’s infrastructural capacities to promote long-term economic growth. When the narrative of ‘predatory’ lending is floated with such ease, it often takes away from the agency of the borrowing countries in determining their own economic paths.
A Flawed Narrative
It is essential to place China’s lending practices within the broader landscape of global financing. The global landscape of finance has been predominantly determined by Western nations and institutions such as the International Monetary Fund (IMF) and the World Bank which have imposed stringent conditions on loans to the developing countries. The programmes that they implemented, like structural adjustment programs (SAPs), often enforced by these institutions as the only path for economic development, demanded privatization, austerity measures, and economic liberalization. These measures have often led to havoc in the developing countries especially in the continent of Africa. It includes widespread economic unrest, social upheaval and environmental degradation. Despite undeniable evidence, these practices were never seen as predatory or colonial. Thus, when China gets singled out for its lending practices as exploitative by these very institutions, some precaution in accepting these terms needs to be asserted. By branding the BRI as exploitative and predatory, we risk oversimplifying the complex dynamics of global debt and economics. The double standard gets hard to ignore when a comparative analysis of Western lending and Chinese lending is studied.
Another critical gap in the narrative of branding China as a malevolent actor is the simple disregard of the agency of the borrowing nations. Given that most developing nations come with the burden of a colonial past and economic exploitation, we must acknowledge that these countries willingly choose to be a part of the BRI. The decision of these countries must be rooted in some economic need for perhaps better infrastructure and connectivity. For many developing nations, the BRI represents an opportunity to make investments that address their long-term economic ambitions and their lack of infrastructural support to achieve those objectives.
The success or failure of the BRI projects are also contingent on several local factors including issues in governance or corruption or even lack of administrative efficiency. Singling China out as creating a model that purposely causes economic harm to these nations would be wrong. Economic instability cannot be caused by one country alone. It is the product of a complex interplay of multiple factors – both national and domestic.
Engaging with BRI Critically
The BRI as an international project of development does not come without its own set of challenges. While it may have shortcomings, its vast economic benefits need to be seen as well. To start with, the BRI does not focus on temporary short-term goals. Its aim has always been to create a long-term impact through the creation of a corridor that acts as a driver for regional connectivity and global integration. It has invested heavily in infrastructural projects including the railways in Africa; it has developed ports in Southeast Asia that have all sought to bolster regional trade and connectivity. These projects have created employment, enhanced market connectivity and contributed towards achieving broader economic goals.
However, the environmental concerns it poses is extremely important to understand. The amount of deforestation, habitat destruction and increased carbon emissions that these large-scale projects have created has been detrimental to the climate. Adding to this has been the lack of transparency associated with some of the projects that include poor labour conditions, inflated costs, lack of administrative efficiency which have led to debt concerns on extended timelines. These are however indicators of a plethora of local conditions and not China’s intention of buying out poor countries by trapping them in debt.
Challenge to the United States
The BRI’s transformative potential extends beyond economic development. It has the power to reshape global trade routes and reduce dependence on US-led frameworks including international financial institutions like the World Bank and IMF. The presence of alternate financing options has added to Washington’s anxiety. The geopolitical repercussions of China’s growing power and a highly volatile internal political dynamic does not help the United States either. Thus, containing China seems to have emerged as its top priority.
Framing the BRI as predatory is only a manifestation of these concerns and insecurities, serving as a tool to undermine China’s legitimacy on the global stage. Employing media narratives to amplify fears about China’s global rise is reminiscent of the Cold War propaganda tactics. Most reports on the study of the ‘debt-trap’ narrative lack empirical evidence and mostly rely on selective case studies and anecdotal accounts. This approach obscures the complexities of China’s engagements and fosters a polarized understanding of its role in global development.
However, China has also done little to dissipate these fears and the narratives that spawn them. As China continues to expand its global footprint through the BRI, it must address criticism, challenges and overall lack of transparency associated with it. Greater transparency in loan agreements and project details would go a long way in dispelling misconceptions and building trust with the international community. By fostering openness and collaboration, China can counter the ‘debt-trap’ narrative and demonstrate its commitment to equitable and sustainable development.
Lastly, a balanced perspective is essential to understanding the BRI and China’s actions. As the global order evolves, constructive engagement with China’s initiatives will be crucial for fostering a more inclusive and interconnected world.
Priyanka Garodia is a research analyst at the Advanced Study Institute of Asia (ASIA). She specialises in international affairs, security, gender politics and feminist international relations.
