A Look At How China Uses Credit To Advance Its Foreign Policy

Brahma Chellaney, The Strategist: China’s creditor imperialism

This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. It was a major acquisition for China’s Belt and Road Initiative (BRI)—which President Xi Jinping calls the ‘project of the century’—and proof of just how effective China’s debt-trap diplomacy can be.

Unlike International Monetary Fund and World Bank lending, Chinese loans are collateralised by strategically important natural assets with high long-term value (even if they lack short-term commercial viability). Hambantota, for example, straddles Indian Ocean trade routes linking Europe, Africa and the Middle East to Asia. In exchange for financing and building the infrastructure that poorer countries need, China demands favourable access to their natural assets, from mineral resources to ports.

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WNU Editor: When it comes to China .... and this comes from dealing with them for almost 35 years .... I can say this without hesitation. The Chinese always attached strings when it comes to money. That is why the above analysis is spot on .... using the "debt trap" on other governments is now a Chinese foreign policy tool .... and they are very effective at that. President Trump warned yesterday that there will be consequences when it comes to aid if countries support the UN resolution condemning the U.S. embassy move to Jerusalem .... President Trump Threatens To Cut Aid To Those Countries Voting Against The U.S. Embassy Move To Jerusalem (December 20, 2017). For the Chinese .... this is a given. If you do not support China, you will get no aid. But they will be willing to loan you money .... with heavy conditions attached to it.