The CCP Belt and Road Initiative has pushed countries into trouble with overloaded debt
Since Sri Lanka announced bankruptcy, mainland China news media voices have spoken about how the Chinese Communist Party (CCP) can recover billions of investments it has lent to the country through the Belt and Road Initiative to expand the Communist Party. I am struggling to propose a solution. The administration’s overseas infrastructure projects.
Formerly known as the “Pearl of the Indian Ocean,” Sri Lanka declared bankruptcy on July 5. Severe inflation, depletion of foreign exchange reserves and a shortage of private resources have disrupted the country’s economy, causing food, electricity and fuel crises.
China accounts for 10% of the $ 51 billion debt and is the third largest debtor in Sri Lanka after Japan and the Asian Development Bank (ADB).
Proposal to provide land in China
Commentary Release On July 10th, on a Chinese portal, NetEase will be able to offer China’s land and infrastructure projects, such as “designate some more special economic zones” and “lease for 99 years” if Sri Lanka cannot repay the money. Stated. “
The article advertised that the CCP’s previous investment in Hambantota International Port and Colombo Port fits in with CCP’s “long-term strategic vision” and the effective use of Sri Lanka’s geographical advantage.
Another article about NetEase published on July 13th suggestion China may consider receiving Sri Lankan assets (such as agricultural products) as debt payments.
Another article entitled “Who Repays Sri Lanka’s Money to China” was cited by several media outlets. say it The CCP could have sent warships to “control Colombo Harbor,” Sri Lanka’s largest port, to cover its debt and make it another Chinese port in Sri Lanka.
But he continued, “If Sri Lanka is willing to transfer the right to build a military base to China, following the example of the port of Djibouti, China will definitely consider it.”
Located on the west coast of the Gulf of Aden in Northeast Africa, Djibouti has access to both the Red Sea and the Indian Ocean and has strategic importance to connect Europe, the Asia-Pacific, the Horn of Africa and the Persian Gulf.
In 2017, China built a PLA naval base in Djibouti, strengthening its global military influence, especially in Africa and the Indian Ocean. according to To the East Asia Forum on May 16, 2020.
Hambantota Harbor
In December 2015, the Sri Lankan government leased Hambantota Harbor to China Merchants Holdings, a CCP-backed port operator, for 99 years, offsetting debt on 15,000 acres of land.
The port, just 6-10 nautical miles from the Asian-Europe route, is an important node to the CCP’s Belt and Road Initiative.
Sri Lanka is an island country on the southern tip of the Indian peninsula, with a population equivalent to Beijing’s population of only 22 million.
Relying on energy imports and underdeveloped in the industrial sector, the country is strategically located on an important transportation route for oil in the Middle East from the Indian Ocean to East Asia.
In 2007, China invested $ 1.5 billion in the construction of a deep-sea port in Hambantota and began operations in June 2012.
However, this port is not working well to attract commuters.
Report of September 2021 by China Merchants Port China Merchants Port Exit Before 2016 —Indicated Hambantota Harbor’s cargo throughput was only 350,000 tons in 2018, reaching 1.2 million tons in the first half of 2021, far behind Singapore’s port, which had a cargo throughput of nearly 600 million tons during the same period.
Therefore, Sri Lanka, which did not receive the expected income, defaulted.
July 25, 2017, Sri Lankan Port Authority signature The Chinese side invites 85% of Hambantota International Port Group Corporation and 99 years of operation and management of the land in and around Hambantota Harbor to China at a low price of $ 1.12 billion to repay the loan from CCP. Transferred to the station.
The CCP, along with some Chinese media, has been criticized for setting up a Sri Lankan debt trap that the CCP has repeatedly denied. say it Sri Lanka would not have had the funds to build Hambantota Harbor without Beijing’s contribution.
However, in reality, the completion of Hambantota Harbor did not bring any benefit to Sri Lanka, leaving debt instead, and eventually the new port was used to offset the debt that left the country in the CCP saddle. rice field.
In contrast, Beijing’s $ 2 billion investment has become an important 100-year-old base on major routes in the Indian Ocean.
Belt and Road Project
In recent years, CCP has lent money to Sri Lanka for infrastructure development.
according to By the end of 2019, Sri Lankan Chinese companies had cumulative contracts of over $ 26 billion and cumulative sales of over $ 19.5 billion, according to a 2019-2020 report on foreign businesses. Projects completed or under construction include four highways, two major ports, two international airports, one of the largest thermal power plants, and an integrated water-saving hub.
Data collected by OOSGA, a strategic and market research organization Indicated Sri Lanka’s GDP per capita in 2020 will be approximately $ 3,852, which is one-third of the world’s GDP level per capita ($ 10,910). Many people in the country rely on families working abroad to send money.
According to statistics, Sri Lanka employs about 1.5 million people in the Middle East and elsewhere, with up to $ 2.5 billion in foreign exchange returned to Sri Lanka each year.
As a result, domestic demand in Sri Lanka is relatively weak. The luxury project funded by the CCP was unrelated to the national situation in Sri Lanka and was considered a large but useless “white elephant” project.
Mattala International Airport, built with a loan from China, is located in the Hambantota region. However, because the region is not a major tourist destination in Sri Lanka, the airport has been called the “emptiest international airport in the world” since its completion and has little traffic.
according to According to a July 2020 report by the Center for Asia Pacific Aviation (CAPA), the airport was one of the few international airports in the world that was unaffected by the pandemic of the COVID-19 virus, as it was passing by a significant number of passengers. It was one of.
Airport highways, major international convention centers, stadiums and shopping malls, built around the port of Hambantota with the support of CCP loans, all remain cold and unmanned.
Report release Many of the completed one-zone, one-road projects could not justify the initial investment decision, according to a April 2019 survey by the Center for a New American Security (CNAS), a US think tank. Instead, these projects have led to financial deterioration in the borrowing countries.
CCP army
The large number of costly projects imposes heavy debt burdens on borrowing countries, making the purpose of CCP’s infrastructure investment questionable.
Craig Singleton, a researcher at the Foundation for Defense of Democracies, a Washington-based think tank, said: Said Last August, VOA said that the CCP’s construction of ports in strategic geopolitical countries, including those at maritime chokepoints, is part of its core global strategy. These ports allow Beijing to exert political influence not only on port countries but also on neighboring countries.
In the 2017 analysis, the China Advanced Research Center, a non-profit organization, Said In a 2004 report submitted to the US Department of Defense Cyber Evaluation Bureau, US Department of Defense contractor Booz Allen Hamilton (BAH) was first to explain CCP’s strategy in the southern waters of the Eurasian Continent. Invented the term “string of pearl”.
The report warned that the Chinese Communist Party is building strategic relationships along the sea lanes from the Middle East to the South China Sea, protecting China’s energy interests while serving a wide range of security objectives.
Chinese media too Mentioned Sri Lanka maintains a warship for China, so when it comes to the Chinese Navy’s multipurpose frigate “Tongling,” which was abolished in 2015 and then transferred to the Sri Lanka Navy, the Chinese Navy is free to drop in at the port for supply. I was able to. She anchored at Hambantota Harbor in September 2018.
Given the geographical location of Hambantota Harbor, the article said that if China stationed an aircraft carrier in the port, its military influence would extend throughout the Indian Ocean region and the security of China’s energy corridor would be more guaranteed. Stated.
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Ann Chan is a writer of The Epoch Times, focusing on topics related to China. She started writing her Chinese version in 2014.