Simone Lawson
The term 'debt-trap diplomacy' was first coined by Indian academic Brahma Chellaney in 2017, in reference to China's lending activities with African countries. The term describes an international financial relationship where a creditor country extends debt to a borrowing nation to increase political leverage. Chellaney's hypothesis attracted wide interest and was endorsed by the US administration, with then-Secretary of State Rex Tillerson claiming Chinese complicity in miring nations in debt and undercutting their sovereignty. However, there has also been pushback against these accusations, with some arguing that the narrative of debt-trap diplomacy underestimates the decision-making power of borrowing countries and overestimates China's intentions.
| Characteristics | Values |
|---|---|
| Name | Brahma Chellaney |
| Occupation | Indian academic, strategic studies scholar |
| Year | 2017 |
| Country | India |
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What You'll Learn
Indian academic Brahma Chellaney coined the term in 2017
Indian academic Brahma Chellaney is credited with coining the term "debt-trap diplomacy" in 2017. In an article titled "China's Debt-Trap Diplomacy", Chellaney accused China of using debt-trap diplomacy in its lending activities with African and Asian countries. He argued that China lends to smaller countries and then leverages their debt burden for geopolitical ends.
Chellaney's hypothesis gained widespread attention, with prominent newspapers such as The Guardian and The New York Times covering it. It also sparked anxiety in the US and its allies, with then-Secretary of State Rex Tillerson claiming that China was complicit in "miring nations in debt and undercutting their sovereignty." The term entered the official lexicon of the US, with two successive administrations using it in public diplomacy.
Chellaney's argument centres on the idea that China intentionally lends excessive amounts of money to low-income countries, which they cannot repay. This forces the borrowing country to relinquish strategic assets or make economic and political concessions to reduce its debt burden. This form of diplomacy provides loans with challenging terms, ultimately expanding the lender's political leverage.
Critics of China's Belt and Road Initiative (BRI) have pointed to debt-trap diplomacy as a tool used by China to pursue geopolitical goals. They argue that China lures developing countries into unsustainable loans for infrastructure projects, and when these countries experience financial difficulty, China can seize their assets. However, some scholars question the existence of debt-trap diplomacy, suggesting that it is a more complicated issue than usually portrayed and that China's lending practices are not intentionally predatory.
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China's Belt and Road Initiative (BRI)
The BRI has three main motivations. Firstly, it is driven by China's rivalry with the US, as most Chinese international trade passes through the Malacca Strait off the coast of Singapore, a major US ally. Secondly, the initiative is a response to the 2008 financial crisis, which left China's market saturated with infrastructure projects. The BRI provides an alternative market for China's state-owned companies beyond its borders. Finally, the BRI is seen as a way to stimulate the economies of China's central provinces, which have historically lagged behind the richer coastal areas.
The BRI has faced scrutiny and criticism in certain countries, such as Thailand, where the collapse of a high-rise building during an earthquake exposed shoddy construction and alleged corruption in a BRI-related project. There have also been concerns about the initiative's potential impact on the Paris climate commitments. Additionally, opponents in Asia, including India, have raised concerns about the partnership between China and Pakistan through the BRI, as it involves territorial links on India's northern border.
Despite these concerns, the BRI continues to be a significant undertaking, with projects such as the Beijing-Shanghai and Qinghai-Tibet railways in China, and the Mombasa-Nairobi railway in East Africa, showcasing China's international development and financial expansion strategy.
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China's lending activities with African countries
The term "debt-trap diplomacy" was coined by Indian academic Brahma Chellaney in 2017 to describe China's lending and leveraging of the debt burden of smaller countries for geopolitical ends. The term has since entered the official lexicon of the United States, with two successive administrations employing it in public diplomacy.
China has been a pivotal lender in Africa, extending loans exceeding US$170 billion to 49 African countries and regional institutions between 2000 and 2022. Chinese loans have played a crucial role in financing infrastructure projects and stimulating economic growth in many African nations. However, critics argue that China may be using these loans to ensnare African countries in unsustainable debt burdens, potentially leading to a loss of sovereignty.
There are mixed views on China's lending activities in Africa. Some argue that China's lending to developing countries is not a plot but rather a reflection of its own domestic lending practices. Others claim that China's loans are predatory and aimed at extending its strategic or military reach. Research by AidData found that Chinese state-owned lenders, driven by profit motives, often include conditions in loan agreements that can strain already fragile African economies.
On the other hand, some African countries, such as Kenya and Comoros, consider China their biggest supporter in their growth over the past decade. China has also shown flexibility during the COVID-19 pandemic, providing a 6-month relief on repayments to 25 countries and waiving off approximately $9.8 billion in debt to other nations.
While the "debt-trap diplomacy" narrative has gained traction, it is important to consider the quality of local governance and decision-making in managing large-scale infrastructure projects and public finances. This plays a significant role in determining whether Chinese lending leads to progress or debt distress in African countries.
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China's relationship with Sri Lanka
The term "debt-trap diplomacy" was coined by Indian academic Brahma Chellaney in 2017. It refers to an international financial relationship where a creditor country extends excessive credit to a debtor country, with the intention of extracting concessions when the debtor country becomes unable to meet its repayment obligations.
Now, onto China's relationship with Sri Lanka:
China and Sri Lanka have had a significant relationship since the end of the Sri Lankan civil war in 2009. China has been a major provider of foreign aid and investment to Sri Lanka, particularly in the areas of infrastructure and the economy. China has also sold modern armaments to the Sri Lankan Armed Forces and the two countries share a military relationship.
One notable example of China's involvement in Sri Lanka is the Hambantota Port project. Sri Lanka sought international loans to develop the port, and after unsuccessful attempts to obtain loans from the United States and India, the country obtained loans from China. The port was financed through Chinese loans and built by a Chinese company. In 2019, Sri Lanka sold an 80% stake in the port to China Merchants Port Holdings through a 99-year lease, allowing Sri Lanka to increase its foreign reserves and pay off foreign debts to non-Chinese creditors.
Sri Lanka has also been a supporter of China's initiatives and positions on the international stage. For example, Sri Lanka supported China's successful application to join the South Asian Association for Regional Cooperation (SAARC) in 2007 and backed the Hong Kong national security law at the United Nations in 2020. Additionally, in 2019, Sri Lanka was one of 50 countries that signed a joint letter defending China's treatment of Uyghurs and other Muslim minority groups in Xinjiang.
Some critics have accused China of engaging in debt-trap diplomacy in Sri Lanka, particularly through its Belt and Road Initiative (BRI). They argue that China lures developing countries into unsustainable loans for infrastructure projects, allowing it to seize assets and extend its strategic or military reach when these countries experience financial difficulties. However, others dispute this claim, arguing that economic factors are the primary driver of BRI projects and that the evidence for "debt-trap diplomacy" is limited.
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Critics of BRI
Critics of the Belt and Road Initiative (BRI) accuse China of pursuing a policy of 'debt-trap diplomacy'. This refers to the idea that China lures poor, developing countries into agreeing to unsustainable loans to pursue infrastructure projects. When these countries experience financial difficulty, Beijing can seize the asset, thereby extending its strategic or military reach.
The term "debt-trap diplomacy" was coined by Indian academic Brahma Chellaney in 2017. He claims that China intentionally leverages the debt burden of smaller countries for geopolitical ends. This claim is supported by US analyst Constantino Xavier, who argues that Beijing finds local partners, makes them accept detrimental investment plans, and then uses the debts to acquire the project or political leverage.
However, there is limited evidence to support these views. A 2019 research paper by Professor Deborah Bräutigam found that most debtor countries voluntarily agreed to the loans and had positive experiences working with China. Bräutigam and Meg Rithmire criticized the media for promoting a negative narrative that misrepresents the relationship between China and developing countries. Similarly, a 2022 Johns Hopkins University study found no Chinese debt-to-equity swaps, no asset seizures, and no "hidden debt".
In addition, the BRI is built through diverse bilateral interactions, and the controversial projects in Sri Lanka and Malaysia were initiated by the recipient governments pursuing their own domestic agendas. Their debt problems arose mainly from the misconduct of local elites and Western-dominated financial markets. While China has faced negative reactions and pushback in these countries, it is to a lesser extent than is commonly believed.
Some critics also argue that the BRI supports authoritarian and undemocratic countries and lacks transparency. There have been reports of construction flaws, project cancellations due to corruption and debt concerns, and projects that have led to nowhere. However, these issues may be due to overzealous engagement on the part of both Chinese companies and BRI partners rather than malicious lending.
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Frequently asked questions
The term 'debt-trap diplomacy' was coined by Indian academic, Brahma Chellaney, in 2017.
'Debt-trap diplomacy' is a term used to describe an international financial relationship where a creditor country extends debt to a borrowing nation to increase political leverage.
The hypothesis suggests that China is using 'debt-trap diplomacy' as a foreign policy tool to lure poor, developing countries into unsustainable loans to pursue infrastructure projects.
In 2018, Rex Tillerson, the US Secretary of State, claimed that China was complicit in "miring nations in debt and undercutting their sovereignty".
