On this episode of China Uncensored,
it's a trap!
HI, Welcome to China Uncensored.
I'm your host, Chris Chappell.
If you've noticed that China seems to be coming up
a lot more often in the news lately,
well, you would be right.
Chinese officials are eager to make China a superpower.
And they're doing it with the help of
an ancient Chinese Communist Party secret:
Lots and lots of money.
Yes, money.
The key to a successful communist regime.
The Party has over the last few years lent
huge sums of money to cash-strapped countries,
and then leveraged that debt to get what it wants.
A lot of this is tied to a trillion dollar plan
to build infrastructure around the world
and then use it to create wealth,
mostly for Chinese companies,
move goods, mostly from China,
and gain influence,
mostly for the Chinese Communist Party.
This project is called the Belt and Road Initiative.
Also known as One Belt, One Road.
Let's get together and feel alright.
Now it's nothing new for countries with money
to spare to help out their needy neighbors
by offering them a loan.
Plenty of countries do it, including the US.
But the Chinese Communist Party does it,
as they like to put it, "with Chinese characteristics"
"This stands in stark contrast to China's approach,
which encourages dependency using opaque contracts,
predatory loan practices, and corrupt deals
that mire nations in debt and undercut their sovereignty,
denying them their long-term, self-sustaining growth."
As you might guess, some of the countries
who have made these deals with China
aren't feeling so alright anymore.
On today's episode,
we'll look at five countries
gripped by the Chinese regime's debt trap.
Number 5: Sri Lanka
The first port of call is Sri Lanka.
In 2010, Sri Lanka got a 1.5 billion dollar Chinese loan
to build a giant port in the town of Hambantota.
Which would be great—
except it has barely any shipping traffic.
Without traffic through the port,
Sri Lanka realized it couldn't pay back its debt to China.
So instead, it signed away the entire port with a 99-year lease.
The China Merchants Port Holdings
got a 70% controlling stake in the Hambantota port.
"With this agreement, we have started to pay back the loans,"
the Prime Minister of Sri Lanka told Parliament,
and talked about there being more money for economic development.
But critics say the cure might be worse than the disease.
Some see the deal as a precedent for countries that owe money
to China to accept deals that involve signing over territory.
Territory that the Chinese regime might want to
eventually use for military purposes.
"There is concern that the Chinese will transform
its 99-year lease of the Sri Lankan port of Hambantota
into another naval base,
the exact 'debt-trap' method the Chinese used in Djibouti."
And a Chinese naval base in Hambantota
would be uncomfortably close to India.
Which might be one reason India might be considering
a deal with Sri Lanka to run what's been called
the emptiest airport in the world.
Sure, there may not be much air traffic,
in fact, there is currently no air traffic at all,
but it is pretty close to the now-Chinese port.
That airport, by the way,
was also built with the help of huge loans from China.
Speaking of uncomfortably close to India...
Number 4: Pakistan
With an overall lending pipeline of over 40 billion dollars
for the China-Pakistan Economic Corridor, or CPEC,
which is a big part of the Belt and Road,
Pakistan already owes China more than 6 billion dollars.
That kind of debt gives China some leverage.
First, China took control of
the strategic deep-sea port of Gwadar…
…and will get to call the shots for 40 years thanks to a lease.
And now, the Chinese military is building a joint naval
and air force base for Chinese troops.
And it's just a short distance up from the coast of Gwadar.
According to this report,
Pakistan not only owes a ton of money to China,
but it's paying high interest rates on those loans as well—
with some loans as high as 5%.
In other cases, Chinese investors were promised
crazy high returns on these infrastructure projects—
like 34 percent each year,
guaranteed by Pakistan's government for 30 years.
But there are signs that Pakistan isn't all that comfortable
being so heavily indebted to China.
Back in November,
Pakistan announced it would not seek Chinese funding
for a new large-scale development.
They said China's conditions for financing the long-delayed
$14 billion Diamer-Basha dam on the Indus River
"were not doable and against our interest"
Pakistan is also heading toward a debt crisis.
That means they might have to get bailed out
by the International Monetary Fund.
Which would not only be embarrassing for Pakistan and China,
but also would probably limit future Chinese investment.
Plus, after a recent election,
it's not clear how the new prime minister
is going to treat these ongoing deals with China.
Has Pakistan learned its lesson after being forced
to let China open a military base on its soil?
Who knows?
But certainly it's not enough of a lesson to stop...
Number 3: Montenegro
What's Montenegro?
It's one of those Eastern European countries
that's approximately the size of Yankee Stadium,
and is located here.
No wait, it's here.
It's also the only country in Europe without a highway.
That's not a joke.
But then the Chinese Communist Party
offered to help Montenegro build one.
The Montenegro government calls "the construction of the century
and a pathway to the modern world."
It would be 100-mile highway with massive bridges
that cut through difficult mountains and valleys.
But Montenegro only has 630,000 people.
Which is fewer people than my small neighborhood in Queens.
So you might wonder why it has spent
950 million dollars on a highway.
Especially since no one even knows where Montenegro is,
so are they really trying to get there on a highway?
There were two feasibility studies done in 2006 and 2012.
Both of them suggested that their proposed highway
would not have enough traffic to justify the cost.
But fortunately,
the Chinese Communist Party was there to help with that.
So construction has begun.
And surprise!
China got a pretty sweet deal.
70 percent of the workers building the highway are from China,
and in case of any legal dispute,
an arbitration court in China has jurisdiction.
And we all know the Chinese justice system
is a model of fairness and rule of law, right?
A European Union official,
who asked to remain anonymous,
is a little less enthusiastic,
saying that Montenegro has run out of money.
"They have strangled themselves.
And for the time being this is a highway to nowhere," the official says.
Hmmm.
Highway to the Nowhere Zone doesn't sound as cool, does it?
What's worse, the road is only partly done.
They need another 1.2 billion dollars to finish it,
which the International Monetary Fund
says Montenegro can't afford to borrow.
With a debt to GDP ratio expected to soon hit 80%,
Montenegro's government has already had to raise taxes,
freeze public sector wages and cut social spending.
But Montenegro's Prime Minister has vowed
to finish the highway "at any cost"
and promises "to deepen cooperation with China in other areas,
including hydropower and tourism."
And that's exactly the kind of commitment Chinese officials want.
Number 2: The Maldives!
Ah, the Maldives!
A tropical paradise located in...ok,
I had to look this one up, too.
It's here, in the Indian Ocean.
Gorgeous weather,
secluded beaches,
and what's this?
The China Maldives Friendship Bridge??
It's a 225 million dollar bridge that's funded
mainly through a grant and a loan from,
you guessed it, China.
The loan is the tough part.
With the funding of this bridge,
it puts the Maldives' debt to GDP ratio at nearly 100%—
meaning it owes as much in debt as its entire economy
generates in one year.
Sounds kind of like my student loan debt.
And take it from me, that's not healthy.
But the Maldives is already dealing with
being swallowed up by rising sea levels,
and could be underwater in 60 years.
So really, does it matter if they're also
financially underwater from debt to China?
They're like, "Yeah, China,
why don't you try to collect your money from the ocean."
Well, the problem of course,
is that before the Maldives becomes the next Atlantis,
the Chinese Communist Party could still force them to, say,
give up land for a Chinese military base,
which would just so happen to be in
an excellent strategic location near India.
But don't worry,
the Chinese Ambassador said in a recent speech
that Chinese investments in the Maldives are totally normal,
and that "The allegations of 'land grabbing'
and 'debt trap' are totally groundless."
Not that anyone asked, but...
it's better to get out ahead of these things.
Sometimes.
Number 1: Djibouti.
If you don't know where Djibouti is,
you've got a problem.
Because I've talked about it so many times on China Uncensored.
The African country of Djibouti is home to China's first,
but definitely not last, overseas military base.
Also, it's just a few miles down the road
from an American military base.
Giving rise to a shocking incident where Chinese personnel
allegedly pointed lasers at US pilots.
Well the joke's on them,
because the US military had already stopped using cats as pilots.
But childish laser games are the least of America's worries.
The Washington Post recently asked,
"Can the Trump administration stop China
from taking over a key African port?"
Why would it want to?
Well, ever since the government of Djibouti
seized control of the Doraleh Container Terminal
from a Dubai-based company in February,
there have been reports that it plans to strike a deal
with a Chinese-state-controlled firm to run the facility.
And it just so happens that the port is the main access point
for American, French, Italian and Japanese bases in Djibouti,
and is critical to launching anti-terrorism missions
in parts of Africa and the Middle East.
The U.S. military is now warning
that if a Chinese-state-run company gains control of the port,
"U.S. national security interests will be put at risk."
Meanwhile, officials warn that Djibouti has been growing closer to,
and is increasingly indebted to,
the Chinese government.
If only someone could shine a light on this problem.
Some kind of bright, single-color beam of light.
So what do you think of the debt traps some countries have fallen into with China?
Leave your comments below.
And before we go, it's time to answer a question
from a fan who supports China Uncensored
on the crowd funding website Patreon.
David Michael White asks:
Chris, which flavor of tea would you
highly recommend for others to taste?
This is probably the most important question
I've ever answered on the show.
I take tea very seriously.
Years before I started China Uncensored,
I worked at a Chinese tea house.
So I know a thing or two.
First of all, if you ever see some kind of blended tea,
like strawberry samurai green tea matcha latte,
run the other way.
Get some high quality, loose leaf tea,
and learn how to brew it.
Boiling water and green tea do not mix.
Start with some cheaper teas to develop your palate
and gradually work your way up to more expensive tea.
My favorite type is Phoenix Oolong teas.
And my personal favorite Phoenix Oolong tea
is one called Ya Shi Xiang.
Which means the fragrance of duck...poop.
To use the more--polite--translation.
The story goes the tea got that name because it was so good,
locals didn't want to share it with outsiders so they gave it
a less than appealing name.
And that's the lesson.
Jealously hoard your tea.
Tea's no joke.
Thanks for the question!
And remember,
China Uncensored is supported by viewers like you.
So I'd like to ask you if you can,
please support the show on the crowdfunding website Patreon
with a dollar or more per episode.
Link is below.
As a way of saying thanks,
you can submit questions you have for me
and I'll answer them at the end of each episode.
Thanks for watching this episode of China Uncensored.
Once again, I'm your host, Chris Chappell.
See you next time.
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