Accusations that China is creating a ‘debt trap’ in Sri Lanka and a Western-Indian-organized smear of the BRI
View of the Port of Gwadar in Pakistan Photo: VCG
As the economic crisis in Sri Lanka and political unrest in Pakistan deepen, the vilification of Western and Indian forces against China’s proposed Belt and Road Initiative (BRI) has reached new heights, with some maliciously claiming that the “Chinese strategic trap” under the BRI has dragged South Asian countries into the political and economic abyss.
Industry insiders and observers said the recent bashing of Western forces against the BRI, in the context of the United States’ Indo-Pacific adjustment strategy that has strengthened US-India cooperation, is another a deliberate and organized attack that doesn’t stand up to scrutiny – similar to how the rumored Chinese-invested surrounding projects at Hambantota Port were destroyed until 2017.
While Chinese investment has fueled growth in South Asian neighbours, Western economies that have exported inflationary pressure and driven up global food and energy prices – a key factor threatening the livelihoods of million people in Sri Lanka – are the ones to blame, analysts said.
Sri Lanka, an island nation of 22 million people, is facing an unprecedented devastating economic crisis this year, with $8.6 billion in debt payments due in 2022. The island nation faces severe shortages everything from basic necessities, food, energy and electricity, CNN reported. Soaring prices reportedly prompted protesters to take to the streets.
An India Today article published on Wednesday blamed the Sri Lankan crisis squarely on “foreign debts and loans from China”. The report quoted opposition leader Sajith Premadasa as saying Sri Lanka had asked China for financial aid after the “2009 war with the rebels”. Sri Lanka’s total external debt soared to over $45 billion, of which about $8 billion came from China. .”
Echoing these allegations, some Western and Indian media and politicians have since early January linked the Sri Lankan crisis to what they have called China’s strategic “debt trap diplomacy”, claiming that loans of China do not make the economy more resilient but rather undue. payments due to China have pushed the country to the brink of collapse.
An India-based Chinese industry insider, who spoke on condition of anonymity, told the Global Times on Wednesday that it was “ridiculous” to blame China for Sri Lanka’s economic woes because it ignores the facts. Contrary to what Premadasa claimed, the insider cited official data and pointed out that China’s loans accounted for only about 10% of Sri Lanka’s loan portfolio, while borrowing from international markets and the Asian Development Bank are Sri Lanka’s two main sources of foreign investment. debts. And loans from Japan also represent 10% of external debt, remaining at the same level as those from China.
“Who should be blamed for Sri Lanka’s economic fiasco? On the one hand, Chinese investments have created many local job opportunities and fueled Sri Lanka’s economic expansion for a decade. On the other hand, sanctions Western unilateral moves against Russia have driven up the cost of energy and agricultural products, making Sri Lanka’s foreign-dependent economy more vulnerable,” said Dai Yonghong, director of the Institute of overseas Chinese interests of Shenzhen University.
In a statement sent to the Global Times, state-owned Power China said its photovoltaic demonstration project for a national defense training school in Sri Lanka, which was completed in December, has alleviated a shortage of electricity. persistent electricity and largely saved expenses for the training school. “The school president also hopes that the two sides will deepen their cooperation in the future,” the company said.
Analysts said the financial crisis has also laid bare the disastrous consequences of overreliance on the US dollar throughout Sri Lanka’s economic system, which has exposed it to dollar depreciation and inflationary pressure from US exports. And so it is the United States that should reflect how much of a blow its irresponsibility has dealt to emerging economies.
According to data from Sri Lanka’s central bank, around 60% of the country’s repayments must be made in dollars.
An old accusation of “debt trap”
The recent political turmoil in Pakistan, China’s “iron brother”, has also offered a new element for Western and Indian anti-China forces to “prepare” new scurrilous attacks on investments within the China-China Economic Corridor. Pakistani (CPEC). Billion dollar BRI flagship project that has brought huge benefits to the local economy.
The Hindustan Times published an article titled “Pakistan and Sri Lanka face political unrest fueled by Chinese debt,” claiming that China owes more than 10% of Pakistan’s foreign debt.
Analysts said this type of workmanship sounds very familiar, as accusations against China of creating a so-called debt trap in South Asia are not new and had already raged in 2017, when Sri Lanka signed an agreement involving the operation of the port of Hambantota. with China. Even Sri Lankan President Gotabaya Rajapaksa then refuted the defamation.
“It has become a national strategy for India to prevent the implementation of BRI projects in South Asia, a region it sees as a rival to China and in which it seeks to expand its influence. Pakistan, she has continually politicized and obstructed CPEC. In Sri Lanka, he has used a combination of economic and political tools to exert maximum pressure on his neighbour,” the insider said, taking the example of a Chinese-invested power grid project in Sri Lanka, which was suspended in December due to the India crisis. interference.
With the release of the Biden administration’s Indo-Pacific strategy, which identifies enhanced US-India cooperation as a key focus of effort to besiege China, the West’s organized slander against the BRI will become more ” intense,” Zhang Xiaoyu, an expert in South Asian studies from the Communication University of China, told the Global Times on Wednesday.
Dai said the subsequent U.S. move could advance the Build Back Better World initiative in Asia, an infrastructure project widely seen as an alternative program designed by the United States and its key allies to offset the achievements and BIS results.
“The question remains, to what extent can the United States and its allies provide some light at the end of the tunnel for the indebted Sri Lankan economy?” the insider asked. “So far we only see limited actions and empty words.”
In March, the Chinese government decided to provide emergency food aid to Sri Lanka, the Xinhua news agency reported. Beijing also signed a 10 billion yuan currency swap with Sri Lanka last year to ease the South Asian country’s public finance crisis.