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Begin New Search Topic Debt Political Geography China Publishing Institution The Jamestown Foundation Publication Year within 25 Years

1. China’s Economy: More Debt than Meets the Eye

Author:
Antonio Graceffo
Publication Date:
11-2022
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
Since the beginning of this year, investment banks and international financial organizations, including the International Monetary Fund and the World Bank, have steadily downgraded their forecasts for the People’s Republic of China’s (PRC) GDP growth in 2022 to around 3.2 percent (Nikkei Asia, October 7). Most analysts agree that Beijing is in a difficult economic position, but the situation has the potential to become far worse due to off-balance sheet liabilities. Such debt risks defaulting, or may otherwise need to be covered by the central government. Another drag on the country’s balance sheet that has yet to fully hit home is the impact of Belt and Road Initiative (BRI) financing. Due to economic problems and debt crises in BRI partner countries, a large percentage of the initiative’s loans may have to be forgive or at least restructured. Before looking at its financing and hidden liabilities, it is necessary to establish an overall picture of the current PRC economy across a broad spectrum of indicators.
Topic:
Debt, Economy, Economic Growth, Belt and Road Initiative (BRI), and Investment
Political Geography:
China and Asia

2. China and Sri Lanka’s Debt Crisis: Belt and Road Initiative Blowback

Author:
Sudha Ramachandran
Publication Date:
05-2022
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
Sri Lanka is in the grip of an unprecedented crisis. For several months, the country has been reeling under a severe foreign exchange crisis. In early May, Foreign Minister Ali Sabry said that its usable forex reserves were just $50 million (Daily News, May 5). As a result, Sri Lanka has been forced to suspend repayment of $51 billion worth of debt owed to China, Japan and other foreign creditors (The Hindu, April 12; The Island, April 13). The country has also been unable to pay for imports of essential commodities, and has experienced serious shortages of food, fuel and medicine (The Island, January 15). The economic crisis has in turn triggered a political crisis. Public anger has boiled over onto the streets. Angry protesters have been calling for the resignation of President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa (Colombo Telegraph, April 7). The Rajapaksa family has dominated Sri Lankan politics for decades and several members of the family are in positions of power as ministers, legislators or heads of corporations and departments. Sri Lankans want the entire clan out. Some of them, including Mahinda, resigned under public pressure in recent months (Island, April 17). Although Gotabaya remains president and under the country’s executive presidential system, continues to wield enormous power, it is evident that the influence of the Rajapaksas has declined. The unfolding crises in Sri Lanka have implications beyond the island. China is among Sri Lanka’s largest bilateral lenders and has played a big role in the island’s infrastructure development. Sri Lanka is a part of China’s Belt and Road Initiative (BRI). Despite China’s pledges that BRI would boost Sri Lanka’s economic and social development by transforming it into “the hub of the Indian Ocean”, Chinese loans are widely believed to have pushed the country into a ‘debt trap’ (Embassy of the People’s Republic of China in Sri Lanka, June 16, 2017). How have the crises impacted China’s image in Sri Lanka and will the decline of the Rajapaksas, widely regarded as ‘pro-China,’ impact Sino-Sri Lankan relations? Finally, will the Sri Lankan crises affect the fate of BRI?
Topic:
Debt, Development, Politics, Infrastructure, Economy, and Belt and Road Initiative (BRI)
Political Geography:
China, South Asia, Asia, and Sri Lanka

3. Mind the Trap: What Basing Rights in Djibouti and Sri Lanka Reveal About the Limitations of Debt as a Tool of Chinese Military Expansion

Author:
Scott Wingo
Publication Date:
04-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
On November 24, 2019, Sri Lankan President Gotabaya Rajapaksa told reporters during his first interview as president that he hoped to renegotiate the terms of the deal that gave a Chinese firm a 99-year lease over the Hambantota Port (Strategic News International, November 24, 2019). The port had been handed over as Sri Lanka struggled to make loan payments on the loss-making Chinese-built facility—thereby leading to debates as to whether the People’s Republic of China (PRC) had set a “debt trap” by intentionally lending Sri Lanka more than it could afford to repay, in hopes of eventually foreclosing on the port (China Brief, January 5, 2019). The subtext was that with a leasehold in hand, the PRC could use the port as a naval installation geared toward patrolling Indian Ocean shipping lanes. As can be observed by the Sri Lankan government’s desire to renegotiate, this has not happened. To the contrary, Sri Lankan security policy has trended against China since the debt-equity swap occurred. A comparison with Djibouti, where the PRC has established its only overseas military base to date, illuminates how this came to pass. In both Djibouti and Sri Lanka, Beijing has used infrastructure loans as a means to entice political leaders to allow naval access. However, three factors led to very different outcomes: 1) the recipient countries’ inherent willingness to host a base; 2) the degree of political competition faced by recipient leaders; and 3) the degree to which recipient leaders can diversify toward different sources of funding to reduce overreliance on China.
Topic:
Debt, Imperialism, International Cooperation, Military Strategy, and Hegemony
Political Geography:
China and Asia