China’s BRI is often accused of creating unsustainable debt-for-infrastructure deals across the world. Discuss in light of debt-trap diplomacy of China.
China’s Belt & Road Initiative is a massive infrastructure project by China aimed at reviving the ancient maritime & terrestrial silk route.
BRI – unsustainable debt-for-infrastructure deals:
- Sri Lanka’s Hambantota port leased to china for 100 years. There is also a role of China’s BRI in Sri Lanka’s current economic crisis.
- Maldives also lost one of its port to china.
- China funded highways in Europe that were found to be financially unviable according to several independent studies.
- Projects in Africa have led to loss of assets to China.
BRI – Part of debt trap diplomacy:
- Unstable Debt – Many BRI source countries owe an unviable percentage of their GDP as debt to China.
- Lack of accompanying funds for training and capacity building services.
- Lack of transparency in projects funded by China.
- Clauses for handing over infrastructure to China in case of failed payments.
- High rate of interest as compared to development finances.
- Information asymmetry.
Thus BRI is seen as a part of China’s debt trap & its larger string of pearls strategy aimed at winning strategic locations & encircling India from all sides.
Way Forward:
- Alternate forums such as Blue Dot Network of USA, Japan, Australia.
- Strengthen multilateral developmental banks such as WB, ADB, etc.
- International pressure on China for transparency in funding mechanism.
Rise of Asian century & India’s role as net security provider need active intervention against above strategy.
Topics: GS-II: Bilateral Regional and Global Groupings and Agreements • GS-II: Important International Institutions Agencies and Fora