Results 1 to 15 of 15
  1. #1
    Thailand Expat OhOh's Avatar
    Join Date
    Jul 2010
    Last Online
    Today @ 05:25 PM
    Location
    Where troubles melt like lemon drops
    Posts
    25,226

    The Chinese ‘Debt Trap’ Is a Myth

    The Chinese ‘Debt Trap’ Is a Myth

    Deborah Brautigam is Bernard L. Schwartz Professor of International Political Economy at the School of Advanced International Studies at Johns Hopkins University

    Meg Rithmire
    is F. Warren McFarlan Associate Professor at Harvard Business School.

    February 6, 2021

    "China, we are told, inveigles poorer countries into taking out loan after loan to build expensive infrastructure that they can’t afford and that will yield few benefits, all with the end goal of Beijing eventually taking control of these assets from its struggling borrowers. As states around the world pile on debt to combat the coronavirus pandemic and bolster flagging economies, fears of such possible seizures have only amplified.

    Seen this way, China’s internationalization—as laid out in programs such as the Belt and Road Initiative—is not simply a pursuit of geopolitical influence but also, in some tellings, a weapon. Once a country is weighed down by Chinese loans, like a hapless gambler who borrows from the Mafia, it is Beijing’s puppet and in danger of losing a limb.

    The prime example of this is the Sri Lankan port of Hambantota. As the story goes, Beijing pushed Sri Lanka into borrowing money from Chinese banks to pay for the project, which had no prospect of commercial success. Onerous terms and feeble revenues eventually pushed Sri Lanka into default, at which point Beijing demanded the port as collateral, forcing the Sri Lankan government to surrender control to a Chinese firm.

    The Trump administration pointed to Hambantota to warn of China’s strategic use of debt: In 2018, former Vice President Mike Pence called it “debt-trap diplomacy”—a phrase he used through the last days of the administration—and evidence of China’s military ambitions. Last year, erstwhile Attorney General William Barr raised the case to argue that Beijing is “loading poor countries up with debt, refusing to renegotiate terms, and then taking control of the infrastructure itself.”

    As Michael Ondaatje, one of Sri Lanka’s greatest chroniclers, once said, “In Sri Lanka a well-told lie is worth a thousand facts.” And the debt-trap narrative is just that: a lie, and a powerful one.

    Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota. A Chinese company’s acquisition of a majority stake in the port was a cautionary tale, but it’s not the one we’ve often heard. With a new administration in Washington, the truth about the widely, perhaps willfully, misunderstood case of Hambantota Port is long overdue.

    The city of Hambantota lies at the southern tip of Sri Lanka, a few nautical miles from the busy Indian Ocean shipping lane that accounts for nearly all of the ocean-borne trade between Asia and Europe, and more than 80 percent of ocean-borne global trade. When a Chinese firm snagged the contract to build the city’s port, it was stepping into an ongoing Western competition, though one the United States had largely abandoned.

    It was the Canadian International Development Agency—not China—that financed Canada’s leading engineering and construction firm, SNC-Lavalin, to carry out a feasibility study for the port. We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. The study, concluded in 2003, confirmed that building the port at Hmbantota was feasible, and supporting documents show that the Canadians’ greatest fear was losing the project to European competitors. SNC-Lavalin recommended that it be undertaken through a joint-venture agreement between the Sri Lanka Ports Authority (SLPA) and a “private consortium” on a build-own-operate-transfer basis, a type of project in which a single company receives a contract to undertake all the steps required to get such a port up and running, and then gets to operate it when it is.

    The Canadian project failed to move forward, mostly because of the vicissitudes of Sri Lankan politics. But the plan to build a port in Hambantota gained traction during the rule of the Rajapaksas—Mahinda Rajapaksa, who served as president from 2005 through 2015, and his brother Gotabaya, the current president and former minister of defense—who grew up in Hambantota. They promised to bring big ships to the region, a call that gained urgency after the devastating 2004 tsunami pulverized Sri Lanka’s coast and the local economy.

    We reviewed a second feasibility report, produced in 2006 by the Danish engineering firm Ramboll, that made similar recommendations to the plans put forward by SNC-Lavalin, arguing that an initial phase of the project should allow for the transport of non-containerized cargo—oil, cars, grain—to start bringing in revenue, before expanding the port to be able to handle the traffic and storage of traditional containers. By then, the port in the capital city of Colombo, a hundred miles away and consistently one of the world’s busiest, had just expanded and was already pushing capacity. The Colombo port, however, was smack in the middle of the city, while Hambantota had a hinterland, meaning it offered greater potential for expansion and development. ....

    Continues at:

    https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomac/617953/


    More extensive research on funding by China, amounts, interest rates, extensios, write-offs etc. available at this downloadable PDF link:

    "NO. 39 | JUNE 2020: “Debt Relief with Chinese Characteristics” by Kevin Acker, Deborah Brautigam, and Yufan Huang"

    http://www.sais-cari.org/s/WP-39-Ack...ebt-Relief.pdf
    A tray full of GOLD is not worth a moment in time.

  2. #2
    Thailand Expat harrybarracuda's Avatar
    Join Date
    Sep 2009
    Last Online
    @
    Posts
    96,565
    Fancy reposting that old bollocks while the chinkies are kicking Lao villagers off their land for another pollution-spewing carbuncle.

  3. #3
    Member

    Join Date
    Jan 2020
    Last Online
    01-08-2023 @ 11:33 PM
    Posts
    510
    There are probably more intellectuals who argue the opposite, that the Chinese Dept Trap is a real thing. Don't think you'll find them if you only search on baidu.com though.

  4. #4
    Thailand Expat Saint Willy's Avatar
    Join Date
    Aug 2019
    Last Online
    30-04-2022 @ 02:44 AM
    Posts
    11,204
    Quote Originally Posted by TTraveler View Post
    There are probably more intellectuals who argue the opposite, that the Chinese Dept Trap is a real thing. Don't think you'll find them if you only search on baidu.com though.

    Exactly.

  5. #5
    Thailand Expat
    panama hat's Avatar
    Join Date
    Mar 2007
    Last Online
    21-10-2023 @ 08:08 AM
    Location
    Way, Way South of the border now - thank God!
    Posts
    32,680
    Does OhNo know there's life outside the PRC PR Bubble?

  6. #6
    Member

    Join Date
    Jan 2020
    Last Online
    01-08-2023 @ 11:33 PM
    Posts
    510
    Instead of first evaluating a borrower country’s creditworthiness, including whether new loans could saddle it with an onerous debt crisis, China is happy to lend. The heavier the debt burden on the borrower, the greater China’s own leverage becomes.
    Corrupt officials around the world can't resist China's easy money (it's not all going to the projects), and once they and their clans have pocketed their millions, what do they care about their country's debt burden?

    China's debt-trap diplomacy | TheHill

  7. #7
    Thailand Expat Saint Willy's Avatar
    Join Date
    Aug 2019
    Last Online
    30-04-2022 @ 02:44 AM
    Posts
    11,204
    Quote Originally Posted by panama hat View Post
    Does OhNo know there's life outside the PRC PR Bubble?
    Probably does, but does not want to admit or explore that line of thinking too much... cognitive overload!

  8. #8
    last farang standing
    Hugh Cow's Avatar
    Join Date
    May 2015
    Last Online
    15-03-2024 @ 01:44 PM
    Location
    Qld/Bangkok
    Posts
    4,110
    In this case OhOh and co may be right. Their seems to be little evidence that the BRI is one big debt trap scam by the Chinese. A report from Australias' Lowy institute as well as other news sources, did not find any evidence to support the debt trap theory.
    For some clarity, the Lowy institute is an independant think tank that was initially funded by Frank Lowy, an Australian developer millionaire who has ties with Israel and some Israeli government ministers, and is considered friendly to the USA. I will leave others to research the institute more deeply. The article on the BRI is attached if you are interested.
    Just to clarify my position, I believe China is currently the biggest threat to world peace and human rights and a danger to Australia and certainly never to be trusted.

    Debunking the myth of China’s “debt-trap diplomacy” | The Interpreter

  9. #9
    Thailand Expat harrybarracuda's Avatar
    Join Date
    Sep 2009
    Last Online
    @
    Posts
    96,565
    Quote Originally Posted by TTraveler View Post
    There are probably more intellectuals who argue the opposite, that the Chinese Dept Trap is a real thing. Don't think you'll find them if you only search on baidu.com though.
    The worst of it is that the corrupt little hitlers that take the chinky backhanders not only saddle their countries with debt, but also send that money straight back to Chinastan. It is the chinkies that get paid for materials and labour to build what are usually useless vanity projects.

  10. #10
    Thailand Expat
    Klondyke's Avatar
    Join Date
    Aug 2014
    Last Online
    26-09-2021 @ 10:28 PM
    Posts
    10,105
    Quote Originally Posted by harrybarracuda View Post
    The worst of it is that the corrupt little hitlers that take the chinky backhanders not only saddle their countries with debt, but also send that money straight back to Chinastan. It is the chinkies that get paid for materials and labour to build what are usually useless vanity projects.
    So, why not to take the debt to the generous IMF and repay the Chinese?
    To repay IMF is not so difficult, is it? There is no "debt trap"...

  11. #11
    Thailand Expat OhOh's Avatar
    Join Date
    Jul 2010
    Last Online
    Today @ 05:25 PM
    Location
    Where troubles melt like lemon drops
    Posts
    25,226
    Thak you all for reading the article and the study. Some comments are obviously from those unable to reach the same conclusions as their authors. The article and study facts do not appear to match their prejudices or geography.

    Quote Originally Posted by Hugh Cow View Post
    Their seems to be little evidence that the BRI is one big debt trap scam by the Chinese
    Thank you for your opinion, link and its conclusion:

    " Since recipients shape the BRI, Victoria’s deal is not in itself problematic, as long as the projects built under its banner are good. Pushing recipients to reject the BRI entirely won’t work, since many will want to keep the option of obtaining Chinese financing.

    Instead, Australia and other countries should provide credible alternative development financing options to recipient countries, such as the AIFFP. They would also do well to engage both recipients and China to improve BRI governance and megaprojects’ transparency."

    Unfortunately, west financial offerings are often more expensive and have more unacceptable caveats.

    As illustrated in both links #01.

    The first published in an ameristani publication; created by amerstani academics, .

    The study performed by researchers from:

    China Africa Research Initiative at Johns Hopkins University’s School of Advanced International Studies

    Which appears to be have faculties in ameristan, Europe and China.
    Last edited by OhOh; 12-06-2021 at 05:08 PM.

  12. #12
    Thailand Expat harrybarracuda's Avatar
    Join Date
    Sep 2009
    Last Online
    @
    Posts
    96,565
    Quote Originally Posted by OhOh View Post
    The study performed by researchers from:

    China Africa Research Initiative at Johns Hopkins University’s School of Advanced International Studies

    Which appears to be have faculties in ameristan, Europe and China.
    Interesting that the leader of this organisation wrote a book called "Will Africa Feed China?" in 2015.

    What with their penchant for hoovering up fish, and munching on rare wildlife like Pangolins, one could argue that it already is.





  13. #13
    Thailand Expat
    Klondyke's Avatar
    Join Date
    Aug 2014
    Last Online
    26-09-2021 @ 10:28 PM
    Posts
    10,105
    Pity that Tony Blair did not have our harry with him 20 years ago. He would be better suitable for being his "spin doctor" than his Alastair Campbell...

  14. #14
    Thailand Expat
    Join Date
    Feb 2006
    Last Online
    @
    Posts
    38,456
    Why are African nations taking Chinese development assistance, when they could be buying American guns to eliminate their tribal enemies?

  15. #15
    Thailand Expat harrybarracuda's Avatar
    Join Date
    Sep 2009
    Last Online
    @
    Posts
    96,565
    Quote Originally Posted by sabang View Post
    Why are African nations taking Chinese development assistance, when they could be buying American guns to eliminate their tribal enemies?
    It's straight cash.

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •