51–60 of 87 posts
> Behind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help. On top of that is the recent discovery that borrowers have been required to put cash in hidden escrow accounts that push China to the front of the line of creditors to be paid. This is the part of “belt and road” where they…
Earlier quoted context omitted.
The important context is that these loans were given with the expectation that the recipient would eventually default. These loans are backed by resource rights, and would also giving China considerable leverage to demand the right to create ports / military bases, etc. Anybody paying attention has seen this coming miles away (example: https://doi.org/10.1016/j.resourpol.2018.04.014 ), but such loans are too tempting…
Sure, but wouldn’t China be relying on those countries willingly giving those things (ports, resources, etc) to them? Why would any country do that?
But basically because it’s not “those countries” giving those things away, it’s the corrupt kleptocrats who represent those countries which are giving them away in exchange for some personal gain. They don’t care about what it does the country because they can take their personal wealth and family to London or Miami and forget about it
Earlier quoted context omitted.
The important context is that these loans were given with the expectation that the recipient would eventually default. These loans are backed by resource rights, and would also giving China considerable leverage to demand the right to create ports / military bases, etc. Anybody paying attention has seen this coming miles away (example: https://doi.org/10.1016/j.resourpol.2018.04.014 ), but such loans are too tempting…
No, this is not true. The loans were not made by special investment banks but regular banks of China, if they are not repayed it will be havoc. They expect the loans to be repaid, and are definitely in trouble now that there are defaults. Also the terms were less generous than IMF etc..
> Behind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help. On top of that is the recent discovery that borrowers have been required to put cash in hidden escrow accounts that push China to the front of the line of creditors to be paid. This is the part of “belt and road” where they…
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It's an article about Chinese lenders rejecting and sabotaging the traditional practice of lenders working together to avoid a default. They're trying to grab as much as they can for themselves while the debtor falls into chaos. You don't need to be the sole or even majority lender to cause immense pain through short-sighted greed by doing that.
> Behind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help. On top of that is the recent discovery that borrowers have been required to put cash in hidden escrow accounts that push China to the front of the line of creditors to be paid. This is the part of “belt and road” where they…
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Do you have any data to back your assertion? The quick search I did on Sri Lankan debt suggests something different.
https://www.erd.gov.lk/index.php?option=com_content&view=art...
https://www.treasury.gov.lk/api/file/a969a81b-13d9-4337-a5b7...
Earlier quoted context omitted.
No, this is not true. The loans were not made by special investment banks but regular banks of China, if they are not repayed it will be havoc. They expect the loans to be repaid, and are definitely in trouble now that there are defaults. Also the terms were less generous than IMF etc..
Regular banks or not, the Congo's Sicomines agreement (linked above) and Sri Lankan port seizure make it pretty clear - China stands to achieve strategic goals when countries default on loans.
Also, everyone is aware that this could be the reality and of the outcomes.
In reality - China's loans were regular commercial loans made by regular commercial banks (don't get me wrong, at the behest of the CCP).
The amount of $ lent out is staggering and it's not going to come back and it's yet another gigantic problem for China.
And yes, in the end, 'ports will be seized' etc..
Also I think we should be cynical in that China has zero goodwill whatsoever, unlike I think the duplicitous goodwill of the West they don't care one bit and will absolutely dig their tentacles into poor countries in an attempt to control them.
Unlike Soviet policy which was based on defence and handouts, China is based on deeper economic integration and they uses their 'very cheap labour and zero regard for anything' to build a lot of stuff. Africa is getting roads and airports which will go a long way to providing cover for the local regimes.
It remains to be seen if they can keep this up, but I don't see it subsiding - China is in a very good position to provide 'very cheap stuff' to 'very poor countries' and lever that economic clout. India also uses it's 'serf population' as a form of geopolitical leverage, if you were wondering 'who build the Qatar stadiums' ... it was that.
It's right for us to be cynical but we can't be arbitrarily cynical, it's generally a bit more complicated, and unfortunately there is zero public discussion or anything in the media in North America, and not enough in Europe either.
Thats the thing I don't get about countries turning to China. America does things for itself but also does things just to advance democracy. China's only interest is China. If your choice is a semi-friendly loan shark or a smash your kneecaps loan shark, I have no idea why countries are choosing the latter.
By the time the bill comes due, you've got enough money to catch a private jet off into the sunset.
It's elite capture 101.
Thats the thing I don't get about countries turning to China. America does things for itself but also does things just to advance democracy. China's only interest is China. If your choice is a semi-friendly loan shark or a smash your kneecaps loan shark, I have no idea why countries are choosing the latter.
Earlier quoted context omitted.
The important context is that these loans were given with the expectation that the recipient would eventually default. These loans are backed by resource rights, and would also giving China considerable leverage to demand the right to create ports / military bases, etc. Anybody paying attention has seen this coming miles away (example: https://doi.org/10.1016/j.resourpol.2018.04.014 ), but such loans are too tempting…
No, this is not true. The loans were not made by special investment banks but regular banks of China, if they are not repayed it will be havoc. They expect the loans to be repaid, and are definitely in trouble now that there are defaults. Also the terms were less generous than IMF etc..
Earlier quoted context omitted.
These countries defaulting is precisely what China intended from the start. The loans are backed by mineral rights, and refusal to honor those agreements would give China all the excuse it needs to back coups, or even resort to military intervention (particularly if the RBIO falls apart, probably due to domestic political strife in America.)
China still doesn't have an expeditionary military. They have very little capability for direct military intervention in any country farther away than Vietnam or India. Even sustaining a small naval flotilla in the Persian Gulf was a major stretch for them. They are working on building up such a capability and the situation may be different in 10 years. But as of today, they really can't.
Yeah, that's what we're discussing.. these 'loans' are in pursuit of their strategic objectives.