![]() ![]() The only way to ensure an uninterrupted supply is to compel nations possessing these into its debt trap. Crude oil and copper are two minerals that China needs, and the continent has them in abundance. As per AidData $11.58 billion worth projects in Malaysia, $1.5 billion in Kazakhstan and more than $1 billion in Bolivia have been cancelled.įor China, Africa was always important, as it was largely ignored by the world. Many countries have commenced stalling BRI projects due to high costs, corruption, overpricing and inability to sustain Chinese loans. Malaysia renegotiated a Chinese railroad project reducing the cost by 1/3rd, while Myanmar reduced a port construction project by almost 1/4th.īangladesh cancelled the Sonadia deep seaport in October 2020 followed by three railway line construction projects. After the Sri Lanka incident, other countries in Asia began renegotiating Chinese loans. In Tajikistan, it secured 1,158kms of territory in exchange for debt. In case it defaults on payment, China withdraws directly from this account. In Venezuela, China has pushed the nation to deposit its oil earnings into an account controlled by China. China adopts different methods to exploit its loans. Sri Lanka is an example of Chinese exploitation of strategic assets, where it was compelled to hand over the Hambantota port, on a 99-year lease to a Chinese state-owned company. It is almost similar to the system adopted by rural money lenders in India. Its estimates varied from $1 billion to 3 billion, and the Chinese ambassador was the determining authority. Six months later, the government was still in doubt of the amount it owed China. The current government headed by Mohmad Solih took control of the island nation in Nov 2018. The construction involves largely Chinese labour, implying their salaries are paid by the host nation. ![]() The funds are not routed through the banks of concerned countries. It adds that nearly 70 per cent of the sums owed by countries are funds provided by China to its own state-owned companies and joint ventures for construction purposes in respective countries. ![]() This report further states that 42 countries owe more than 10 per cent of their GDP to China. A report released by a research laboratory, AidData, in end of September stated that 165 countries owe at least $385 billion to China which funded their projects. Reports also mention that loans are given at commercial rates of interest and penalties for failure to repay are included. In most cases the agreements signed are secretive and nations cannot release the terms and conditions. As per a Chinese think tank, the International Institute on Green Finance, the BRI covers 40 countries in Sub Saharan Africa, 34 in Europe and Central Asia (including 18 belonging to the EU), 24 in East Asia, 17 in the Middle East and North Africa, 19 in Latin America and the Caribbean and six in Southeast Asia.Ĭhina has been largely exploiting Low-and Middle-Income Countries (LMIC). ![]() He also promised vaccines and other support to African nations, hoping to woo them to continue supporting the Belt Road Initiative (BRI). Simultaneously, addressing the Eighth Ministerial Conference of the Forum on China-Africa Cooperation, President Xi Jinping stated, “China will exempt African Least Developed Countries from debt incurred in the form of interest-free Chinese government loans due by the end of 2021.” Two days after this development made global headlines, Chinese officials in Beijing refuted these claims stating China had not taken over any assets in Africa. Uganda’s attempts to reschedule the loan were turned down. There were reports that China was scheduled to take over Uganda’s Entebbe airport as the country had failed to repay a $207 million loan. ![]()
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