“The rich rule over the poor, and the borrower is a slave to the lender”
China is now the largest lender of credit globally, surpassing traditional lenders like the world bank, IMF and OECD!!! The Chinese Government’s claim to the rest of the world rose from $500 billion to $5 trillion in the last 20 years, accounting for 5% of the global GDP. The target countries are primarily developing countries lulled by Chinese promises of infrastructure assistance, only to have their debt grow out of control later.
The debt trap diplomacy-Chinese version: The theory of debt-trap diplomacy is that the creditor country extends excessive credit to a debtor country to extract economic or political concessions from the debtor country after the debtor country becomes unable to meet its debt repayment obligations. The Chinese version comes with clauses of confidentiality, where the credit terms are kept secret from other lenders, such as the IMF, etc. The Chinese also stress keeping the credit terms secret from the citizens in both the borrowing and the lending country, who otherwise have a legitimate right to know. A report claims that close to 42 countries in the world whose public debt exposure to China is above 10% of the nation’s GDP. These countries include Pakistan(CPEC), Sri Lanka(Hambanthota Harbour), Maldives, etc.,
The belt and Road initiative/THE TRAP: The debt trap diplomacy of China primarily revolves around the concept of its flagship infrastructure project-Belt and Road initiative (earlier called One belt One road). The Belt and Road Initiative(BRI), a Centre-piece of Xi-Jinping’s foreign policy, is an ambitious economic and commercial project that focuses on increasing connectivity and cooperation among various countries spread across the continents of Asia Africa, and Europe. Initially, it was envisioned as an ambitious project to restore the ancient silk route that dated from the 2nd century B.C. until the 14th century A.D, which stretched from Asia to the Mediterranean, traversing China, India, Persia, Arabia, Greece, and Italy. This route connected a multitude of trade posts, markets, and maritime ports, and it traded not just silk and fabrics but also essential commodities like gunpowder and paper (which eventually led to the invention of the printing press), all of which had a significant impact on the western world.
The BRI links China with other countries in lieu of ancient sea and silk routes of China with a series of latest infrastructure projects including bridges, railways, ports, energy power plants by investing trillions of dollars, resulting in win-win cooperation of participating countries along with China. But in reality, the practice is different. Now, suppose you are familiar with the mutual funds' investment advertisements. In that case, there’s a pronunciation “read investment-related documents carefully,” The Belt and Road initiative comes in place of that famous saying where the debt-trap diplomacy was terms & conditions in discreetly small letters, as the Chinese would say, “economic cooperation with Chinese Characteristics.”
For instance, in Srilanka, where the Chinese built Hambantota Port was leased to the Chinese for 99 years due to non repayment of loans to the Chinese Govt., which it had begin to Sri Lanka for construction of BRI constructions in its land. Another Glaring example of debt-trap coercion can be attributed to Pakistan, where China has planned to invest almost 60$billion for the CPEC. CPEC passes through Pakistan-Occupied Kashmir (Gilgit-Baltistan), an Indian territory illicitly occupied by Pakistan, which many have intimated as the white elephant of the century given the debt ratio to GDP of Pakistan booming out of control.
String of pearls: The BRI involves mainly all the neighbours of India such as Pakistan, Bangladesh, Sri Lanka, Myanmar, Nepal, and the Maldives, i.e., sans Pakistan, every country which has close relations with New Delhi and falls within the area of strategic significance for India which relates to the hypothesis ‘The string of Pearls.’ A string of Pearls is a strategic encirclement strategy by the Chinese to encircle India by building military infrastructure along the key points in the Indian Ocean to pressure New Delhi and check its military supremacy in the Indian ocean. The militarization of BRI cannot be ruled out since the Chinese have already begun constructing a naval facility at Gwadar Port, which Pakistan has leased to them until 2059. (The gateway to CPEC). The presence of Chinese submarines in Karachi (2014) and Colombo (2015) also indicates that militarization is imminent.
Concerns for India: The Chinese geopolitical strategy-string of pearls via debt-trap diplomacy and militarization of the Belt and Road initiative(BRI) program indicates that such a system will encircle India and threaten its power projection, trade, and territorial integrity. Significantly, the China-Pakistan Economic Corridor (CPEC), which passes through Pakistan-Occupied Kashmir (Gilgit-Baltistan), an Indian territory illicitly occupied by Pakistan, undermines India’s strategic interests and territorial integrity.
The Chinese pre-emptive moves and militarization of the BRI demonstrate that by attempting to outmanoeuvre India in the Indian Ocean, China is driving India closer to the United States and its allies. Nevertheless, few experts believe that India should not boycott the BRI and that it can be advantageous if it is economical and trade-oriented per se, with no geopolitical underpinnings that favour Chinese interests.
About The Writer
B J K Rajkumar
Pursuing PGDM at IMT, Hyderabad
A constantly evolving person writes about Sino-Indian geopolitics.
No comments:
Post a Comment