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EDITORIALS & ARTICLES
Does China Debt-Trap Countries?
The economic crisis in Sri Lanka, Pakistan and Nepal has brought focus on the debt trap diplomacy. It is a Chinese technique of strengthening its hold over a country through a series of debts that make the country completely dependent on China.
Victims of Chinese debt trap diplomacy
- Sri Lanka
- Pakistan
- Nepal
- Myanmar
- Kenya
- Maldives
Characteristics of China’s debt trap diplomacy
- High expenditure projects
Most of Chinese sponsored projects are high expenditure, well beyond the capabilities of the host country. This makes them vulnerable for default. - No self sustaining returns
The projects are termed “white elephants” as they are not self-sustainable in future. The maintenance of such projects is a challenge. - Sovereignty challenge
The ultimate effect is that the host country will be unable to pay debts and China gets hold over the property for a long term.
Role of soft power and development-based assistance
- Grants and soft loans
Assistance can be provided in form of grants and soft loans so that it can help the host country to improve its infrastructure without falling into debts. - Technological support
Support should be in form of technological assistance in field that is beyond their capabilities. This will ensure that less dependence is created. - Need based projects
Assistance should be provided to projects that are utmost necessary such as infrastructure, technological upgradation and defence rather than unnecessary beautification projects.
Thus, development-based support is more necessary than falling victim to debts. India can play a role that is holistic and sustainable.