China daily hits back at ET report on Beijing’s debt trap for Asia
Chinese state-owned newspaper Global Times has responded caustically to an article—’ China may put South Asia on road to debt trap ‘—published in The Economic Times.
The article had highlighted that China’s grandiose global connectivity initiative—One Belt One Road (OBOR) or Belt & Road Initiative (linking China with Europe via SE Asia & C Asia through land & sea links)—which is set to receive a formal endorsement at the May 14-15 international meet has the potential of adverse economic implications for countries in South Asia.
The article cited the case of Sri Lanka which has run into a huge debt trap by welcoming Chinese-funded projects. The article argued that the debts are turning into equity and finally ownership for Chinese firms which would not only adversely impact Sri Lankan and Pakistani economies but also create security implications for India due to China’s constant presence in the periphery.
“While India has always come across as being skeptical about China, an article in India’s Economic Times on Tuesday went to the extreme of smearing China as a snake in the grass that “may put South Asia on the road to a debt trap”,” says the Global Times article.
The article in The Economic Times argued that Colombo was running up huge financial losses owing to high interest rates charged by Chinese lenders for the mega infrastructure projects which will now be part of OBOR. It said the huge sum of over $50 billion for China-Pakistan Economic Corridor could spell doom for an already faltering Pakistani economy.
“For the Hambantota port project, Sri Lanka borrowed $301 million from China with an interest rate of 6.3%, while the interest rates on soft loans from the World Bank and the Asian Development Bank (ADB) are only 0.25–3%. Interest rates of India’s Line of Credit to the neighbouring countries are as low as 1%, or even less, in some cases,” says the article in The Economic Times.
While the Global Times article has nothing to say on the huge interest rates China charges from smaller countries, it cites growth numbers for those countries: “Figures speak louder than words. GDP growth in countries and regions along the Belt and Road route stood at an average of 4.6 percent last year, fueled by new infrastructure projects, according to statistics from PricewaterhouseCoopers earlier this year.”
The article claims the increasing Chinese footprint in Asia is for economic development while taking a sly dig at India’s security concerns: “All of this essentially points to India’s tight nerves about its giant neighbor. In fairness, it makes sense for India to stay awake and alert – according to the ancient Chinese proverb, “life springs from sorrow and calamity, and death comes from ease and pleasure.”