[vishnugupta]

> In other words, what has changed

It's often a series of mis-steps that lead to catastrophic failures such as being suffered by Srilanka. Here are a few that come to my mind, in no particular order.

  1. Tourism took a big hit due to COVID lockdowns.

  2. They took on huge debt from China to fund their massive infrastructure developments with close to zero plan as to how to reap the benefit of that infrastructure. For instance this airport[1]

  3. The knee jerk banning of fertiliser.

  4. Corrupt and authoritarian (despite being democratically elected) government favouring their cronies.

News articles trying to analyse look for a recent bad policy choice such as fertiliser ban but one could see that even 5 years ago that Srilankan economy was being badly managed. The ingredients of catastrophe were there and COVID acted as the catalyst.

[1] https://www.forbes.com/sites/wadeshepard/2016/05/28/the-stor...

[2] https://www.reuters.com/markets/commodities/sri-lanka-rows-b...

[FooBarWidget]

#2 is actually false. Only ~10% of Sri Lanka's debt is Chinese. The majority is from western private market lenders. Chinese debt also have lower interest than western ones.

See this detailed report by The Atlantic: The Chinese ‘Debt Trap’ Is a Myth https://www.theatlantic.com/international/archive/2021/02/ch...

And this study by British campaign charity Debt Justice, which found that the situation in Africa is similar: https://debtjustice.org.uk/press-release/african-governments...

The Chinese debt trap is a lie made by mainstream media, who for some reason blindly writes negative China articles without any kind of factual investigation. Worse, these lies distract us from actual debt traps initiated by western actors — over we which we have far more control than China. If we actually care about these countries then we need to first demand from the media that they do factually correct reporting.

[randomperson_24]

Then why did China ask for the Hambantota port[1]. It is a clear strategic and economic policy. Not to deny other countries haven't done that in the past; but it is a clear way of gaining control - especially the taking control over infrastructure part.

Same is the case with Africa, and many projects of which do not benefit the citizens of those countries in any way too. [2]

[1]: https://www.nytimes.com/2018/06/25/world/asia/china-sri-lank... [2]: https://www.youtube.com/watch?v=aJSD8XV3qzE

[FooBarWidget]

The Hambantota case is described in detail in The Atlantic's articl, which explains why it's not a debt trap. For one, the feasibility study for Hambantota was first made by Canada — the Chinese only came in later, competing with western countries for its construction. Second, see this excerpt:

> Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota.

Even if we assume that Hambantota is a problem, total Sri Lanka debt owned by China is still at 10%, much less than non-Chinese debt. China is not the biggest problem, if it is one at all.

Whether projects benefit citizen really is up to African governments. Chinese companies build whatever African governments ask them to; Chinese don't force their projects on Africa. When I buy a house and the house doesn't end up benefiting me, that's my problem for having chosen that house, not the mortgage's fault for "debt trapping" me.

But it's not at all set in stone that none of the projects, or even the majority of the projects, are useless. In a recent study, "China Surpasses US in Eyes of Young Africans, Survey Shows": https://www.bloomberg.com/news/articles/2022-06-12/china-sur...

[xenadu02]

I'm not sure why you're carrying so much water for China, a huge nation that can fend for itself.

China absolutely throws its weight around - just like all the other big nations.

It also blindly pursues its own self-interest again like all the other big nations.

China also isn't a monolith, with companies and individuals making deals or going after projects abroad. Sometimes on win-win terms, sometimes trying to screw a target out of money. Again - just like other nations.

China uses money in diplomacy. That's just a fact. They do so not out of altruism but out of self-interest.

[FooBarWidget]

I can also turn this around: I'm not sure why you have so much problem with me pointing out that accusations are not based on facts. It sounds as if you want those accusations to be true despite facts.

What is wrong with doing things not based on altruism? There is nothing wrong with business. Nobody builds bridges and hospital for free.

[JumpCrisscross]

> Only ~10% of Sri Lanka's debt is Chinese. The majority is from western private market lenders. Chinese debt also have lower interest than western ones

My understanding is more of the Chinese debt is unproductive. 5% borrowed to build a useless port saps FX in a way 20% borrowed to buy yield-boosting agricultural inputs does not.

[FooBarWidget]

From The Atlantic's article, the feasibility study for the Sri Lanka port came from Canada. The Chinese didn't "trap" them into something unproductive, a western study said it's feasible.

[yread]

Also there were conditions linked to the debt. Here is the money but you have to use it to build a highway using Chinese companies. Pure neocolonialism

[FooBarWidget]

Those conditions are negotiable. Countries can say "no" to "using Chinese companies". If countries say "we want local companies" then Chinese negotiators say "okay let's do that".

Furthermore, a major reason why Chinese companies did the work was due to a lack of skilled workforce in the country. Some countries chose for a hybrid model, where they ask for Chinese companies to train local workers.

Finally, if something does go wrong, then The Atlantic's article says that Chinese lenders are often willing to restructure the loan.

[philliphaydon]

> Countries can say "no" to "using Chinese companies".

Except they aren't as the contracts prohibit open bidding.

> The Atlantic's article says that Chinese lenders are often willing to restructure the loan.

Except when they are not willing, which is most often the case. They restructure when things are seemly fine but if shit hits the fan like in the case of Sri Lanka, they wont discuss it.

But the CCP prob jots it down to 'a mistranslation' and 'rumor' as they have done in the past.

[FooBarWidget]

They restructured African debts when Africa got into trouble due to COVID, so the claim that "they only restructure when things are fine" is emperically false.

Regarding being able to negotiate: high-profile African commentators, such as Gyude Moore, have pointed out on multiple occasions that it's perfectly possible to say no to an offer, after which the Chinese offer new terms. You should check out his videos some time.

[InvertedRhodium]

Are there any examples of western nations taking control of power grids, ports, etc, when those loans are defaulted on?

[clarionbell]

It used to be, mind you some decades ago, a normal policy for foreign government to keep what they have payed for. Take Panama or Suez canal. That being said, the practice is essentially colonialism and for various reasons it became taboo in the west.

Publicly that is. If you are private company there is still a lot of things you can get away with, but you won't get gunboats to show up anymore.

Simply put. China is doing the same thing. Performing business like decisions on international scale. West has just decided that such approach is immoral and mostly abandoned it as a policy.

[vishnugupta]

> West has....abandoned it as a policy.

Has it though? They don't do it overtly but through IMF. When a debt ridden country approaches IMF for help that help comes with heavy strings attached such as cutting down social spending, and privatisation. And IMF is controlled by ex-colonial nations. Even a developed nation like Greece got a taste of it. The funny thing is through a debt ridden country IMF is in fact helping debtors who are mostly western entities.

There are quite a few layers here to peel but safe to say west hasn't abandoned their policy just that they outsourced it to IMF.

[FooBarWidget]

If the lending country is poor and one does not take the asset itself as collateral, then how does one lend to these countries? Don't lend at all? What should these countries do to acquire critical infrastructure?

[clarionbell]

You are on the right track. That's one of the reasons China makes inroads across global south, because it's willing to "make a deal". Another reason is that China doesn't want any sort of commitments to international standards, democracy etc.

Western governments offer 'help', but it's rarely what local governments want. And often it means publicly complying with rules imposed from the 'outside'. When the 'outside' includes your former colonial overlord and you have turned anti-colonialism into most important aspect of your political identity (for example African Union has no problem with dictators, or genocide, but you better not have capital on different continent) you'd be undermining your regime by accepting it.

In the meantime China offers exactly what you ask for, and doesn't ask about minorities or how long your presidential term is.

For now it's mostly working out for locals, their governments at least. In the long run ... Congo had very beneficial relationship with Portugal during the first century or so, not so much afterwards.[0]

[0] https://en.wikipedia.org/wiki/Kingdom_of_Kongo#Foundation_of...

[FooBarWidget]

There are those who believe that conditions such as committing to international standards and democracy, even though well-intended, are actually counter-productive — at least during a country's development phase.

It's indeed an open question how beneficial the relationship will be in the long term. But it's not at all guaranteed that it will end up like Portugal. China was a big naval power during the Ming dynasty, but didn't colonize Africa or South-East Asia. One should be careful with projecting western history onto China.

Some high-profile Chinese figures recognize the problem that BRI projects don't always end up benefitting people. For example, Zhang Chun, researcher at the Center for African Studies at Yunnan University, said this:

"There is a lack of an accurate analysis of Africa's benefits from the Belt and Road Initiative and that needs to be remedied"

Source: 欧亚系统科学研究会 https://mp.weixin.qq.com/s/Vva1N_LVMBwcfpZcSl57rw

[epups]

Yes, privatization was heavily pushed by the IMF in Latin America and Africa as a condition for receiving loans [0].

[0] https://en.wikipedia.org/wiki/Structural_adjustment