China has ensnared 75 impoverished nations in a debt trap, now pressuring them for billions of dollars in repayments. The BRI project is being utilized by China to tighten its grip on these developing countries.
China BRI Project: China's debt web is tightening around the world's poor and developing nations. A recent report reveals that China has lent billions of dollars to 75 of the world's poorest countries. These nations are now obligated to repay $22 billion in debt installments this year, placing immense pressure on their economies.
Lowy Institute Report Reveals Findings
Australia's Lowy Institute released a report on Tuesday stating that China has lent approximately $35 billion to 75 of the world's poorest countries. This debt burden is so significant that it hinders these nations' ability to invest in crucial sectors such as healthcare, education, and climate change mitigation. The report explicitly states that China has transitioned from a helpful banker to a debt collector for these countries.
China Entangling Poor Nations Through BRI
These loans were disbursed under China's Belt and Road Initiative (BRI) project. Through this initiative, China has provided extensive loans for the construction of roads, bridges, airports, hospitals, and other infrastructure in poor and developing countries. China offers these loans at high-interest rates, gradually ensnaring these nations in a debt trap and subsequently strengthening its strategic influence.
China Emerges as the Largest Creditor in a Lending Spree
By 2016, China had established itself as the world's largest creditor, with total debt exceeding $50 billion. This figure surpasses the combined lending of Western nations. China has leveraged these loans to gain control over the natural resources and strategic areas of numerous countries.
Laos and Other Nations Crushing Under Debt Burden
The Lowy Institute report cites Laos as an example. Laos incurred substantial debt from China to fund major investments in its domestic energy sector. However, it is now overwhelmed by this debt burden. China ceased lending when Laos needed it most, leaving countries like Laos facing severe economic crises.
Mounting Domestic Pressure on China
Despite China's global lending activities, it is now facing increasing pressure to collect debts domestically. Countries like Pakistan, Kazakhstan, Mongolia, and Laos are heavily indebted to China. Furthermore, resource-rich nations such as Argentina, Brazil, and Indonesia are also under China's scrutiny.
China's Strategic Maneuvering Behind the Loans
China's utilization of debt extends beyond mere economic gain; it serves political purposes as well. The report indicates that countries severing ties with Taiwan and establishing diplomatic relations with China subsequently received loans. Honduras, Nicaragua, the Solomon Islands, Burkina Faso, and the Dominican Republic, for example, received loans within 18 months of ending their relationships with Taiwan.
Accusations of Concealing True Debt Figures
According to the Lowy Institute report, China conceals its debt figures. Limited data is available on the BRI project. In 2021, another report by AidData estimated that China had lent approximately $385 billion.
