‘Debt trap’ in various places after 10 years of One Belt, One Road
Chinese companies maximize profits by inflating costs… Sri Lanka loses port operation rights
Israel-Hamas war crisis gap… China seeks to expand influence in the South China Sea, etc.
With the 10th anniversary summit forum of the Belt and Road Initiative, a key project of Chinese President Xi Jinping, being held in Beijing, China on the 17th and 18th, criticism of the Belt and Road Initiative is also increasing. This is because many developing countries that participated in the Belt and Road Initiative, such as Nepal, Pakistan, and Sri Lanka, are suffering from a ‘debt trap’ in which their debt to China has increased without reaping any economic development effects.
On the 16th, the New York Times (NYT) presented the international airport that opened in January this year in Pokhara, Nepal’s second city, as evidence. Last year, Nepal, the world’s poorest country, with a per capita gross domestic product (GDP) of only $1,352 (approximately 1.83 million won) according to the International Monetary Fund (IMF), borrowed excessive ‘Chinese money’ to build an airport. However, with so few users, it was diagnosed that there was no way to repay the money borrowed from China.
Pokhara is an international tourist destination where you can see major Himalayan peaks, including Annapurna Peak. Nepal began building an airport with Chinese money in 2016. The construction company was the Chinese company CAMC Engineering, and the cost was $216 million (about 291.6 billion won).
NYT reviewed thousands of pages of related documents and criticized China for setting construction costs high to maximize its own profits and not complying with Nepal’s various safety regulations.
The original expectation that it would be able to receive 280,000 international passengers per year was also wrong. Most routes are limited to some cities in China, and it is difficult to find international passengers from countries other than China. Nepal must repay China for the money it spent on airport construction starting in 2026, but if things continue this way, it will be difficult to repay the loan. China avoided immediate response to Nepal’s request to postpone the loan, only saying, “We will open more routes to Nepal.”
Like Nepal, Sri Lanka, which developed the southern strategic port of Hambantota with Chinese money, was unable to repay its debt to China and handed over port operation rights to China for 99 years. Cambodia, Egypt, etc. also lost the operation and ownership of major assets in which Chinese money was invested through a similar process.
Despite the ‘debt trap’ controversy, China is clear about its intention to strengthen the One Belt, One Road project. First, it was decided to disclose the specific contents and goals of the new maritime cooperation initiative ‘blue economy’ during this forum. It is expected to contain a policy to expand China’s influence in the South China Sea and other areas in response to the United States’ Indo-Pacific strategy.
The Wall Street Journal (WSJ) in the US and The Guardian in the UK diagnosed that China also sees the war between Israel and the Palestinian armed group Hamas as a new opportunity to confront US hegemony. In particular, for China, which has been raising the possibility of conflict with the United States over Taiwan, it is a great benefit for the United States to divert its attention. Wang Yi, a member of the Chinese Communist Party’s Central Political Bureau and Minister of Foreign Affairs, said on the 14th that Israel’s attack on the Palestinian Gaza Strip, the stronghold of Hamas, had gone too far and “beyond the scope of self-defense,” Israel and the United States said. The criticism of can be seen as an extension of this.
However, the growing Western criticism of the Belt and Road Initiative is a burden for China. Italy, the only one of the seven major countries (G7) that expressed its intention to participate in the Belt and Road Initiative, recently made its withdrawal from the Belt and Road a fait accompli as concerns over a ‘debt trap’ grew. In addition, it is also a point that cannot be overlooked that in the war between Israel and Hamas, China’s criticism of Israel could lead to another phase of conflict with the Western world, which supports Israel.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.