It’s Time For The United States To Drop The Debt-Trap Narrative – Analysis

China’s Xi Jinping. Photo Credit: Kremlin.ru, Wikipedia Commons.
Published October 9, 2024

Despite an exhaustive body of empirical research that disproves the existence of Chinese ‘debt-trap’ diplomacy, it continues to have salience among US officials. While these officials may find value in mobilising the ‘debt-trap’ narrative to support alternatives to China’s Belt and Road Initiative (BRI), they fail to recognise that this narrative denies the agency of local actors.

The ‘debt-trap’ narrative projects US anxieties about its inability to develop a coherent trade policy and absolves it from innovative policymaking. Reliance on this narrative undermines US efforts to engage the Global South and exacerbates tensions in the China–US bilateral relationship.

A fundamental problem with the ‘debt-trap’ narrative is that it is patronising. It reflects a perspective that BRI host countries are ill-informed and incapable of making sound decisions. More importantly, it elides local agency and context. Empirical research on the BRI and Chinese lending indicates that local actors play an important role in shaping the BRI’s implementation, particularly in areas such as project selection, location, construction and operation. For example, in the case of the China–Pakistan Economic Corridor, Pakistani officials were the proponents for the routes that make up the corridor, its three phases and its sectoral focuses.Financial news subscriptions

Local actors in host countries are often the ones that initiate requests for Chinese investment on projects that they prioritise. This was evident in the case of Sri Lanka’s much-maligned Hambantota Port, where the Rajapaksa administration specifically lobbied China to invest in the project.

The ‘debt-trap’ narrative also lacks salience in much of the Global South because there simply is no evidence of China repossessing infrastructure due to host countries’ inability to repay their loans. This includes the Hambantota Port, whose 99-year lease was exchanged for US$1.1 billion dollars that Sri Lanka used to pay debts to Western lenders and to boost its foreign reserves. China has regularly resorted to restructuring or forgiving BRI loans in addition to becoming a lender to countries in need of financial assistance and liquidity.

 

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SOURCE: www.eurasiareview.com

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In Brief

Despite an extensive body of research refuting the notion of Chinese ‘debt-trap’ diplomacy, it persistently influences US officials largely because it reduces their sense of responsibility for developing new policies despite increasing tensions in the China–US relationship. The ‘debt-trap’ narrative undermines local agency and fails to capture the complexities of countries’ interactions with China. US officials should dispense with this narrative in order to formulate better policies for mutually beneficial economic development and cooperation in the Global South.

 

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SOURCE: www.eastasiaforum.org