By: N.S. Venkataraman
While China is showing its military muscle power to India, Japan, and a few other Asian countries, in the case of other small Asian
Countries, it is showing its economic muscle power to bring them to their heels.
Most of the small Asian countries do not have the capital and resources for investment in projects, and therefore, they seek overseas investment and funds almost desperately. Such foreign investments come not only from China but several other countries. However, there is a significant difference between the investments and collaboration from China compared to that of other nations.
It is now well realized by most Asian countries that China has the particular objective of dominating Asia and bringing it under its thumb so that it would remain as the undisputed leader of Asia and then extend this domination to other parts of the world. The recent activity of China indicate that it has no hesitation to use its economic muscle power to achieve its objective of dominating the other Asian countries with weak economies.
China is investing heavily in the small Asian countries and extending a soft loan to several of them to implement the projects. This gives a great opportunity for China to open the market for its products to these countries and also dump its equipment and machinery there.
Though China claims that its investment, economic aid, and soft loans have no strings attached, the ground reality is different. With massive soft loans extended to the Asian countries that have no resources to invest and in the event of these countries unable to repay the debt and interest, China is bound to force them to convert debt into equity in various projects aided by China and in the process, China would get some level of control in the economy and governance in the Asian countries in later days. There are several signs of this already happening.
Sri Lanka and China:
Sri Lanka’s estimated national debt is around 64.9 billion USD, of which around 8 billion USD is owed to China. It is reported that Sri Lanka now spends 90 per cent of all government revenues to service debts.
Apparently, Sri Lankan government now realizes the possibility of its getting into China debt trap and the consequent threat to its sovereignty in the long run.
It is reported that Sri Lankan government has decided to revise the agreement with China regarding its Chinese built southern port of Hambantota, where the China government owned China Merchants Port Holdings, which built the port for 1.5 billion USD, signed an agreement earlier taking an 80% stake. Sri Lankan government is reported to have decided to limit the Chinese company’s role in running commercial operations at the port and not permitting any military activities.
This decision of the Sri Lankan government to limit the activities of the Chinese company in the port would certainly displease China, and it remains to be seen how China would react to this decision in the coming days.
Bangladesh and China
While Sri Lanka is now facing the threat of debt trap from China, the situation faced by Bangladesh is no better.
China has provided large soft loans to Bangladesh to fund the China supported projects in Bangladesh. It is quite likely that Bangladesh will not be able to repay the debt in the foreseeable future. China knows this. China is now demanding, directly and indirectly, to change the pattern of loan for the projects and converting it to commercial credit, which would bear higher interest rates. While Bangladesh has resisted the Chinese demand so far, it remains to be seen as to how long it can do so.
Mongolia and China:
China now accounts for around 68.5% of Mongolia’s foreign trade between January and May this year, which has gone up from 1.5% in 1989. Such trade relations with China is pushing Mongolia into a debt trap. Mongolia has much coal, and copper deposits and China would be eyeing these deposits, if and when Mongolia would not be able to honor the trade commitments to China.
Pakistan and China:
China–Pakistan Economic Corridor; also known by the acronym CPEC, is a collection of infrastructure projects that are currently under construction throughout Pakistan. Initially valued at $46 billion, the value of CPEC projects is now worth $ 62 billion. CPEC is intended to rapidly modernize Pakistani infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects, and special economic zones.
Almost the entire investment in the Economic Corridor Project is made by China, as Pakistan has little resources to spend on this project. China is supporting the Economic Corridor Project by investing in equity and extending the soft loan. Pakistan will not be able to repay the debt and the interest in the foreseeable future
China’s investment and involvement in various strategic projects in Pakistan are so deep that there is no way that Pakistan can get out of China’s strangle hold in future.
Nepal and China
China’s investment in Nepal is now steadily increasing, and the politically, economically weak Nepal is rapidly coming under China’s economic dominance.
Venezuela and China
In the case of Venezuela, China has invested over 52 billion USD, and Venezuela with its weak economy will never be able to pay back the debts. China’s investment is now partly by equity and rest by debt.
All the Chinese loans to Venezuela are commodities backed, under which Venezuela is obliged to keep supplying to China millions of barrels of oil to feed the Chinese economic boom.
Long term game plan under progress:
China is emboldened in its strategies to economically subjugate the Asian nations by the success of its game plan in Pakistan, where China’s domination is now almost complete.
North Korea is another region where China’s game plan to dominate has been well executed. This isolated country is almost entirely dependent on China now, and perhaps, it has already become an extended territory of China.
Another ongoing game plan for China is in Myanmar where a natural gas pipeline is being laid from Myanmar to China, and in the coming years, the sale of natural gas to China would become the main economic stay of Myanmar and Myanmar need to keep China in good humor all the time.
While the smaller Asian nations do have apprehensions about China’s long term game plan, they seem to have already partly fallen into China’s debt trap.