The Chinese 'Debt Trap Diplomacy' is a Myth! The lie the world got used to. PCL week 52

The Chinese 'Debt Trap Diplomacy' is a Myth! The lie about China the world got used to. PCL week 52 #chinasnewnormal #BRI #debttrap #beltandroad #

CONTENT
00:41 Is China the world's biggest loan shark? The story goes that Beijing is a predator that wants to control many developing countries in the future by luring them into a debt trap.
01:29 Is the debt trap linked to the Belt and Road (BRI)? The debts that China gives out are indeed part of the deals of the Belt and Road. China has already spend close to a trillion USD in 68 countries to support infrastructure building around the world.
02:14 Is it true that many countries cannot pay back the loans from China? Yes. 23 out of 69 countries of the BRI are at risk of debt distress. But the fact that this would mean that China is luring them into this debt is a lie that has been debunked. Even the Hambantota port of Sri Lanka has been found not to be a 'debt trap'
04:13 Why do we think of Chinese loans as debt trap diplomacy? In our history, the West has treated developing countries often through trojan horse mentality, soft power and vassal state deals; hence we believe China could do the same as China's past also reveals vassal state mindset, soft power aid and trojan horse thinking. But why would China not have evolved like we did? This is not a logical assumption, but when we look at China's military presence, we do not see China in same presence in developing countries as the West even today.
06:46 How doe trade and GDP relate to the BRI and debt trap? 20 years ago, China was trade partner with many of the countries that are part of the BRI now. But America accounted for 80% of trade partner with the world then, while the roles are reversed today. As for GDP, China was poorer than Africa in 1980 in GDP per capita, but today is richer than any African country in GDP/capita. So it's logical that many countries want China's help to grow as they did.
09:11 What drives the Belt and Road Initiative? It's driven by 4 things: 1. It's economically, not politically driven; it's driven by overcapacity of state owned enterprises; it's driven by demand from recipient countries; and it's driven by profit, but the whole project is still very much in start-up fase.
11:08 How should we look at Belt and Road initiative? The best way is to compare with China in 1980. Lots of investment was going to build factories of the world, it was profit driven, its was not very well regulated, there were lots of human problems. This is a learning curve for China where China needs to learn to improve their oversight on these projects; they are learning the hard way how to integrate better with local population and habits; China needs to regulate better the gold diggers joining the projects; the failures are too high still - or the return on investment will take decades to get, if ever. China is going through the challenges to create opportunities.
13:50 Why are countries taking on so much Chinese debt? One reason is that China is treating them as equal partners, which can help them grow the country economically faster. The other harsh reason is that China is interventionist, which means that governments in global south with different governance than western democratic countries favour Chinese investments as it helps them stay in power or share projects with some of their friends and family.
16:11 What are the challenges for countries to take on debts from China? There are four issues; 1. many countries do lack the competence to manage complex infrastructure projects, making them dependent on China. 2. Many have gotten used to Western Aid, which means they are assuming these debts are to help them, not to trade with them.
3. Few western institutions are willing to loan money for infrastructure, so they turn to China. 4. The local countries have often weak governance on worker rights, which is giving China and then a bad reputation through these projects.
18:47 What are China's challenges with the Belt and Road Initiative? The biggest challenge is their communication to the world. The second challenge is that they gain very little politically, so no real soft power. The deals are often less profitable than estimated. And finally, when projects seem to fail, they never gain any assets, so the return on investment is pushed in the future. The biggest problem for China is that the BRI projects are usually very high risk projects, which the world does not want to do. These are very high risk projects.
23:17 Does the Belt and Road Initiative have real societal gains? Yes. Nations are getting richer and devictimized, but most important new opportunities for workers in future and breading of local entrepreneurs.

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