The Chinese Debt Trap Is Taking Over The Entire World
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The Chinese Debt Trap Is Taking Over The Entire World

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nytimes.com

China has been quietly building an empire across the globe that will soon dominate the world, and not many Americans or Europeans realize it.

The United States and its European allies have a reputation for conquest and colonization, but they are not the only superpower nations who are playing the game of imperialism. These countries typically build their empires through war and occasionally through debt, although the debt strategy is mostly used by international organizations like the World Bank, IMF, and UN. However, while these western nations have been getting all of the attention on the global stage, China has been creating a massive empire through diplomacy and debt.

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Over the years, China has poured billions of dollars into overseas projects, helping to lift the economies of many nations across the globe, including South Africa, Sri Lanka, Malaysia, and many others. The loans gave these countries the economic boost that they needed to become more significant players on the global stage, however, these countries have all seen economic hardships when it came time to pay back the money, because the conditions of the loan are very strict.

When China loans money to a country and they are unable to pay, which happens often, the country must then give up a large stake in its economic infrastructure, including ports and trade routes. This strategy of conquest is popularly known as “debt trap diplomacy”

Debt

Photo Credit: CNN

According to Wikipedia, “Debt trap diplomacy involves one creditor country 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.”

This week, popular media commentator Nas Daily posted a video where he detailed the China debt trap and shared experiences from his travels around the world.

This is a sensitive topic, but it’s one I’ve wanted to show you for a while. After traveling the world for 3 years, I think I saw more Chinese construction people than local ones in many countries,” Nas said in his video.

One of the most glaring examples of China’s debt trap is the case of Sri Lanka. China gave a loan to the Sri Lankan government through the Exim Bank of China to build the Magampura Mahinda Rajapaksa Port and Mattala Rajapaksa International Airport. The state owned Chinese firms, China Harbour Engineering Company, and Sinohydro Corporation were hired to build the Magampura Port. The port cost $361 million to build, and 85% of the construction was paid for by China’s state-owned Bank at an annual interest rate of 6.3%. However, in 2017, Sri Lanka was unable to repay the massive debt, so the new infrastructure projects were was leased to the China Merchants Port Holdings Company Limited, a China state owned company. Through the deal, China was able to take over the infrastructure projects on a 99-year lease.

China

Photo Credit: Architecture update

This caused concern in the United States, Japan, and India that the port might be used as a Chinese naval base to contain China’s geopolitical rivals.

It is important to note that the “debt trap” label is a controversial one, with experts at odds about China’s true intentions. Some experts believe that China is just engaging in good diplomacy, creating a win-win relationship with other countries across the world.

However, other experts say that China is acting no different than the “economic hit men” from John Perkins’ best selling book. Perkins’ book, “Confessions of an Economic Hit Man” details how international corporations from the United States control developing countries through high-interest loans and the debt that follows. The United States does employ this strategy, but China has mastered it, and has been able to spread its influence through debt and diplomacy like no other nation on earth.

Nas Daily ended his video by saying, “The world is already ‘made by China’. I think slowly it will become owned by China.”

Regardless of whether China’s intentions are pure or greedy, there is no doubt that they are positioning themselves as the top global super power of the 21st century.

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Bernard Marr has always been interested in how the economy works. After the financial crash of 2008, Marr began to learn as much as he could about alternative currencies and Austrian economics. Marr has also become an expert in cryptocurrency and the blockchain industry, and continues to study its impact on global finance.

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