Debt-Trap Diplomacy

Chinese approach of intentionally extending excessive credit to another debtor country with the alleged intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations (often asset-based lending with assets including infrastructure). The conditions of the loans are often not made public and the loaned money is typically used to pay contractors from the creditor country.

Western analyst warns that the money invested by China in Africa may help it close the gap for its infrastructure needs, but the practice is unethical.[16] The rising debt of developing nations in the world from China has become a part of the economic growth history.[17] The far-reaching approach of China in promoting its lending history is said to be dramatic.[17] Studies of economic experts in the practices of China found that the patterns of China’s bank lending are purposefully done to trap governments and gather strategic opportunities for China.[17] Indian strategist Brahma Chellaney explains that “It’s clearly part of China’s geostrategic vision”.[18]

Africa’s loans to China are in exchange for long-term high value resources of the country that includes ports and minerals that most likely end at exploitation of the natural resources by the African government, and the Chinese government through giving them advantage of access to utilize the country’s resources.[18] Most importantly, China was allowed to interfere with the country’s economy and gain strategic advantage in Africa and other host countries.[19] Jonathan Hillman, director of the Reconnecting Asia project for the Center for Strategic and International Studies states “If it can carry goods, it can carry troops”.[17]