Zheng Tao: The "black cauldron" of the "debt trap" is definitely not backed by China

Source: World Wide Web

Recently, affected by the delay of the new crown epidemic and the geopolitical crisis, the price of commodities in the international market has soared sharply, Sri Lanka, Pakistan and some African countries have encountered debt difficulties, and us and Western politicians and media have once again stirred up the so-called "debt trap" cold rice, falsely claiming that China has provided loans to developing countries through the "Belt and Road" initiative, and when they are unable to repay, they will take the opportunity to obtain strategic resources, and create public opinion to pressure China to significantly reduce relevant debts. However, looking back at the development process and facts of the so-called "debt trap", it is not difficult to see that the United States and the West are the real initiators and makers of the "debt trap".

The United States and the West are the real pioneers of the "debt trap"

Conceptually, the term "debt trap" was first tailored by scholars for the International Monetary Fund (IMF), which is controlled by the United States, and pointed out that the IMF forced developing countries to accept institutional reforms and sell high-quality assets through the debt "drugs" of "more and more loans, more and more loans, and more loans". In practice, the United States uses its monetary policy and the dominance of the using dollar to force developing countries to submit to their economic and financial systems, undermine the debt servicing capacity and development foundation of developing countries, and eventually fall into the "debt trap". For example, in the 1980s, some Latin American countries radically promoted the American neoliberal economy, promoted the privatization of state-owned enterprises, caused inflation to soar, high debt, and finally forced to submit to the IMF, while borrowing new debt to repay old debts, on the other hand ceding part of political sovereignty, implementing austerity fiscal policies, falling into a vicious circle, and it is difficult to escape in the real "debt trap".

The United States and the West are the real creators of the "debt trap"

Relying on the "hegemony of public opinion" and "hegemony of discourse," the United States has for many years fabricated data and fabricated lies, repeatedly hyped up the problems of China's "debt diplomacy" and "China's debt trap," ignored the suffering of the people of countries deeply mired in debt distress, turned a blind eye to the important economic and social benefits achieved by China's aid and the large number of debt relief actions it has taken, and attempted to blame China for the economic crisis facing developing countries. However, is the recent debt and economic crisis in Sri Lanka really as the United States and the West have rendered? The truth is:

Sri Lanka's biggest creditor is not China. According to the Central Bank of Sri Lanka, of Sri Lanka's approximately $51 billion in foreign debt, 80% of the World Bank, the Asian Development Bank and institutional investors from the United States, Japan and other countries account for less than 10%, while China accounts for less than 10%, and more than 60% of Chinese loans are preferential loans, and interest rates are much lower than in the international market. Sri Lanka's ambassador to China, Palitta Kohona, has publicly stated that the Western hype about China's "debt trap" is unfounded and that foreign media reports are "an illustration of looking for any opportunity to criticize China." Debt Justice, a British charity, recently released a report saying that 35% of African countries' external debt comes from Western private lenders, which is almost three times that of China's loans to Africa, and the average interest rate is about 2 times that of China's loans to Africa. This is the truth of the so-called "debt trap"!

When Sri Lanka suffered from debt difficulties, it was not China that fell into the trap. After the debt crisis in Sri Lanka, China has repeatedly provided help to the Sri Lankan people through various channels, sending emergency humanitarian assistance such as food. In contrast, some Western creditors, the Hamilton Reserve Bank of the United States, filed a lawsuit against Sri Lanka in the local court in New York when the debt crisis worsened, demanding that Sri pay the principal and interest of the bond in full, totaling up to $257 million, which is tantamount to taking advantage of the fire.

It is not China that has plunged Sri Lanka into an economic crisis. Under the superposition of the new crown epidemic and the Ukraine crisis, the Sri Lankan government's ability to repay its debts has decreased sharply, and the Federal Reserve has raised interest rates wildly and international capital outflows, which have become the "last straw" that crushed the Sri Lankan economy. Under the current unjust international economic system, the United States and the West do not want to see developing countries really strong and change the existing Western-centered international political and economic pattern. Looking at the world, the West, especially the United States, uses financial hegemony, repeated malicious lending and short-selling means, and uses the heavy "debt chain" to lock developing countries at the bottom of the industrial chain and serve the capitalist market and the economic and trade hegemony of the United States and the West. In essence, it is the West that has imposed the unsustainable economic development model of "borrowing the new to repay the old" and "raising debts with debts" on developing countries such as Sri Lanka, resulting in the final "explosion" and "bankruptcy" ending.

In reality, it is China that has extended a helping hand to countries in debt crisis. China has actively participated in the G20's Debt Suspension Initiative and Common Framework for Debt Treatment for the poorest countries, while Western private creditors have refused to participate. Among the G20 members, China has the largest amount of debt relief, and has signed debt relief agreements and consensus with 19 African countries, and has announced the cancellation of interest-free intergovernmental loans due from African least developed countries, heavily indebted poor countries, landlocked developing countries, and small island states that have diplomatic relations with China as of the end of 2018. After the Slovak government announced the termination of the repayment of foreign debts, Chinese financial institutions immediately took the initiative to negotiate with the Sri Lankan side and hoped to properly handle the due China-related debts; China also provided a total of 500 million yuan of emergency humanitarian assistance to Sri Lanka, which is the largest amount of free assistance received since the outbreak of the economic and people's livelihood crisis in Sri Lanka; The pledge of 10,000 tons of rice, 2,000 tons of which had recently arrived in Sri Lanka, was urgently needed by the People of Sri Lanka. To solve the problems of developing countries plagued by debt problems, China will do what it says and do what it says.

It is China that is really concerned about the future and destiny of the development of developing countries. State Councilor and Foreign Minister Wang Yi pointed out that the "Belt and Road" is not a debt "trap", but a "pie" for the benefit of the people. Taking Sri Lanka as an example, for more than a decade, China has invested more than 10 billion US dollars in the field of infrastructure in Sri Lanka, of which the "Belt and Road" landmark projects Colombo Port and Hambantota Port have become an important window for Sri Lanka's economic opening up and development, Hambantota Port has provided 6,000 direct jobs and 5-100,000 indirect jobs for the local area as soon as it is completed, with the help of the mainland's excellent port management technology and the east wind of the "Maritime Silk Road", Sri Lanka's total export volume and transportation efficiency have been greatly improved. This will all contribute to achieving a virtuous circle of debt sustainability and endogenous growth.

Whether it is "help" or "trap" is for debtor countries to have a say. Facts have proved that the so-called "China Debt Trap Theory" is a "discourse trap" created by those forces that do not want to see China cooperate with developing countries to accelerate development, and it is even more a "development trap" specially set for the vast number of developing countries. Facts speak louder than words, and the "black cauldron" of the "debt trap" China will not and cannot carry it!