Communist China Accused of Exporting Debt Traps to the Poorest Countries

It was reported that the world’s poorest countries will have to bear $40.8 billion in debt payments this year of which 40% is owed to Communist China. The World Bank’s data shows that Communist China provided $170 billion worth of loans to these countries as of 2020, while just $40 billion in 2010.

 However, AidData, a research institute affiliated with the College of William and Mary, believes the true figure could be twice as high. They found half of these loans were kept off government balance sheets by funneling money through state-owned or private institutions and companies.

 The World Bank’s data shows that by the end of 2020, the countries most indebted to Communist China are Pakistan with $77.3 billion, Angola with $36.3 billion, Ethiopia with $7.9 billion, Kenya with $7.4 billion, and Sri Lanka with $6.8 billion. In relative terms, the country with the highest debt burden to China as a percentage of GNI is Djibouti, at 43 percent. This is followed by Angola at 41%, the Maldives at 38%, Laos at 30%, etc. Communist China is currently the number one lender to the world’s poorest countries.

 According to the Chatham House’s conclusions, these Chinese loans are more like commercial loans, especially in terms of repayment terms and the specificity of the infrastructure projects they targeted. The lack of transparency over the terms of the loans signed by these developing countries has led to a fierce domestic backlash and foreign accusations that Communist China is engaging in debt trap diplomacy.

 By accepting unaffordable loans to build infrastructure projects, in the case of default, the CCP may seize these projects to expand its economic, military, or geopolitical influences. The most typical case is the CCP eventually seized a 70 percent stake in a Sri Lankan port, and a railroad in Laos has already suffered the same situation.