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A China's Debt Trap Diplomacy

How China will Trap Countries with Credit Loans and Control Resources

By Muhammad Sarib AliPublished 12 months ago 3 min read
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A China's Debt Trap Diplomacy

China's rising economic power has brought with it a new strategy called "Debt Trap Diplomacy." Under this strategy, China offers developing countries loans and investments to fund infrastructure projects, but these loans often come with strings attached. In this article, we will explore how China uses credit loans to trap countries and control resources, and provide examples of countries that have fallen victim to this strategy.

How China Traps Countries with Credit Loans

China offers developing countries large loans for infrastructure projects, such as building ports, highways, and power plants. These loans often come with favorable terms and conditions, making them attractive to countries with limited financial resources. However, the loans are not without strings attached.

Firstly, Chinese loans often come with a requirement that the borrowing country hires Chinese companies to undertake the infrastructure projects. This means that Chinese companies gain valuable experience in these developing markets, giving them a significant advantage over local companies. Chinese companies also bring their own labor force, which can be a source of tension with local communities.

Secondly, Chinese loans often require collateral in the form of natural resources. This means that if the borrowing country is unable to repay the loan, China has the right to take ownership of natural resources, such as minerals, oil, and gas. This gives China control over key resources, which they can then use to fuel their own economy.

Examples of Countries Trapped by China's Debt Trap Diplomacy

Sri Lanka is one of the most prominent examples of a country that has fallen victim to China's debt trap diplomacy. In 2010, China loaned Sri Lanka $1.5 billion to build a new port in the southern city of Hambantota. The port was built by a Chinese company and opened in 2013, but it failed to attract enough business to make the project financially viable. Sri Lanka was unable to repay the loan, and in 2017, China took control of the port on a 99-year lease, along with 15,000 acres of land around the port.

Pakistan is another country that has become heavily indebted to China. Pakistan has borrowed heavily from China to fund the China-Pakistan Economic Corridor (CPEC), a series of infrastructure projects including roads, railways, and power plants. As of 2021, Pakistan's debt to China stands at $22 billion, and there are concerns that Pakistan may struggle to repay these loans.

Resource Control through Debt Trap Diplomacy

In addition to trapping countries with debt, China also uses debt trap diplomacy to gain control over key resources. For example, China has invested heavily in African countries in exchange for access to natural resources. China has loaned billions of dollars to African countries to fund infrastructure projects such as railways, highways, and power plants. In exchange, China gains access to natural resources such as oil, minerals, and timber.

Angola is one of the countries that has been heavily influenced by China's resource control strategy. Angola is the second-largest oil producer in Africa, and China has invested heavily in Angola's oil sector. China has also invested in infrastructure projects in Angola, such as a $3.5 billion railway that links Angola's Atlantic coast to the Democratic Republic of Congo. In exchange, China gains access to Angola's oil resources.

Conclusion

In conclusion, China's debt trap diplomacy is a complex issue that has far-reaching consequences for developing countries. While China's infrastructure projects may seem like a lifeline for countries with limited financial resources, the long-term costs can be crippling. China's requirement that the borrowing country hire Chinese companies and provide collateral in the form of natural resources gives China a significant advantage in these markets, and can lead to tension with local communities. Furthermore, China's access to key resources through debt trap diplomacy can have implications for global geopolitics and economic power dynamics.

As China's economic power continues to grow, it is likely that more countries will fall victim to its debt trap diplomacy strategy. However, it is important for these countries to carefully consider the long-term implications of accepting Chinese loans and investments. While short-term gains may be tempting, the long-term costs can be significant. It is also important for the international community to hold China accountable for its actions and ensure that developing countries are not unfairly burdened with debt or lose control over their own resources.

In summary, China's debt trap diplomacy strategy raises important questions about the balance of power in global economics and politics. As we continue to navigate a rapidly changing world, it is important to consider the implications of these actions for the well-being of developing countries and the stability of the international system.

humorpoliticsfact or fictionbusiness wars
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About the Creator

Muhammad Sarib Ali

Sarib is an experienced Content Writer with 5 years of experience in the CNet industry. He is a creative and analytical thinker with a passion for creating high-quality content and crafting compelling stories.

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