China’s Neo-Economic Imperialism Shackles Defaulting Small Nations

SALEEM SAMAD 

Communist China for decades used to air propaganda on its state radio that the United States, Japan, Britain, and European countries are economic imperialists, warmongers and back autocratic regimes in third-world countries.

Political economists and several think tanks describe China has become an economic giant and definitely a new superpower.

There are reasons to be concerned about the dramatic rise of China as a military power in the Asia-Pacific region.

A British popular tabloid newspaper The Sun claims that China is “colonizing” smaller countries by lending them massive amounts of money, which they can never repay.

Developing countries from Pakistan to Djibouti, the Maldives to Fiji, all owe huge amounts to China and have fallen into a debt-trap.

Alarm bells are ringing for Pakistan’s public debt is piling up, while a new narrative taking shape in the West that the controversial Belt and Road Initiative (BRI) is creating a debt trap for developing economies, many are quick to link Pakistan’s ballooning debt to loans incurred under the China-Pakistan Economic Corridor (CPEC).

The BRI flagship $62bn project in Pakistan links with the persecuted Uyghur Muslims in East Turkistan (now Xinjiang Province) of China and is being built through disputed territory in Gilgit-Baltistan, Pakistan-administered Kashmir, and restive Balochistan.

The ambitious project fails to address the participation of the fiercely independent Baloch people. Time will explain whether the full utilisation of Gwadar Port built by the Chinese will be feasible.

Now Pakistan will have to repay $100 billion to China from 2024 of the total investment of $18.5 billion, which China has invested on account of bank loans in 19 early harvest projects, under CPEC.

Very recently, Rhodium Group, a US-based research organization, reviewed 40 cases of China’s external debt renegotiations.

It was found that defaulters are being pressured into surrendering control of assets or allowing military bases on their land.

Sri Lanka is the best example of being riddled with debt. Owing more than $1 billion in debts to China seized control of Hambantota port for use by companies owned by the Chinese government on a 99-year lease.

The Sun article alleges that the defaulters have been pressured into surrendering assets and territory or allowing military bases on their land, thus increasing its military footprint in the region. There is only one other reported case of asset seizure from Tajikistan in 2011.

Meanwhile, the Doraleh Container Terminal in Djibouti has fallen into Chinese hands, particularly because it sits next to China’s only overseas military base. Djibouti is home to the US military’s main base in Africa.

A report from The Center for Global Development, a Washington DC-based nonpartisan, nonprofit think-tank offers some insight into the spreading China debt.

Researches exemplify how infrastructure project loans to Mongolia, Montenegro, and Laos have resulted in millions or even billions in debts, which often account for huge percentages of the countries GDPs.

Well, most of the projects are linked to the BRI and undertake work on roads and ports with part-funding from China, a bold project to create trade routes through huge swathes of Eurasia, with China at the centre.

China’s economic empire is visible in the Pacific region, prompting fears the country intends to leverage the debt to expand its military footprint into the South Pacific.

Australia expressed alarm at this move, which would effectively increase Chinese military presence on a key gateway to Australia’s east coast.

Sydney’s Lowy Institute think-tank, which has closely monitored China’s activities in the Pacific, estimates Beijing has poured nearly $ 1.74 billion into Pacific countries since 2006.

Among the projects this money funded was the largest wharf in the South Pacific – considered capable of accommodating aircraft carriers.

China approached Vanuatu about setting up a military base. The country owes $238.32 million to China.

Tonga also carries some big debts and has already admitted to struggling with repayments.

Other big debtors include Papua New Guinea, which owes roughly $621.30 million in development and aid debt, Fiji, which owes $606.23 million, and Samoa, with a debt of  $225.77 million.

Critics, however, dismiss China’s lending practices explaining the Chinese were “sincere and unselfish” in mega-projects in countries that are unable to repay loans.

The change of heart from a third-world leadership to “economic imperialism” cause fear among the poor and developing countries.

First published in The News Times, Dhaka, Bangladesh, February 26, 2023

Saleem Samad is an independent journalist and a media rights defender. A recipient of the Ashoka Fellow (USA) and Hellman-Hammett Award. Twitter @saleemsamad; Email: saleemsamad@hotmail.com

China ‘Belting’ Pakistan on The Road to A Debt Trap

SALEEM SAMAD

The political debacle of the ambitious Gwadar International Port built by the Chinese is yet to be fully operational. It was discovered that the challenges were unbearable and the threat perception has increased manifold in the restive Balochistan province in Pakistan.
The security threat challenged by Baloch separatists and armed nationalists demanding an independent Balochistan has caused a ripple of fear for the future of the Gwadar Port and China’s ambitious connectivity with Central Asia into the Arabian Sea.
The ‘all-weather friends’ China and Pakistan signed a precursor deal to develop the Karachi coastline at the cost of $3.5 billion – another would be a debt trap.
China’s strategic shift from Gwadar to Karachi has prompted Pakistan’s ousted Prime Minister Imran Khan to dub the “jackpot” project “a revolution” in his Tweet to develop Karachi’s coast.
Chinese policy puts strategy over investment and ignores profits. The Chinese Communist Party’s (CCP) leadership has shifted from high-risk lending to hedging its bets.
The ancient silk-road was envisioned as a megaproject – Belt and Road Initiative (BRI) by China’s powerful President Xi Jinping.
However, the project seems to have hit a speed bump after reaching Gwadar and is losing its steam.
Meanwhile, China is extremely concerned about the safety and security of its personnel engaged in the construction of China-Pakistan Economic Corridor (CPEC) projects, including the Karakoram Highway linking with Gwadar.
China defending its lending practices, said they were “sincere and unselfish”, and insisted it only lent to countries that could repay.
Patterns of Chinese investments in South Asia – Bangladesh, Nepal, Pakistan, and Sri Lanka – all of which are part of BRI, depict Chinese propensity to control the domestic markets and the natural resources of the South Asian nations.
Many countries where China has offered ambitious BRI proposals could not contemplate where and when they were going to fall into a debt trap.
Some countries admitted that they have fallen into a debt trap and the mega infrastructure is being colonized, like the $306.7m Hambantota International Port in Sri Lanka built by China in 2010.
In 2016, a 70 per cent stake of the port was leased to China Merchants Port Holdings Company Limited (CM Port) for 99 years for $1.12bn. The lease was questioned during the street revolution which toppled the Rajapaksa brothers. The cash-starved Sri Lanka now wants the port back.
Pakistan is one of them. They know where the trap is. The Sunni Muslim majority nation knows they are sliding into China’s debt trap. Despite the debt trap, a strong pro-Chinese lobby with Pakistan elites and military in Rawalpindi promotes Chinese megaprojects, while the politicians have to swallow the Chinese red pills.
Pakistan is China’s gateway to Central Asia and the Middle East. CPEC’s transportation corridor will create a low-cost network of roads, railways and other infrastructure and substantially increase trade capacity between southwest China with Europe, the Middle East and North African countries.
The $62bn Gwadar project links with the persecuted Uyghur Muslims in East Turkistan (now Xinjiang Province) of China and is being built through disputed territory in Gilgit-Baltistan, Pakistan-administered Kashmir, and militant-infested Balochistan.
Well, the BRI flagship project in Pakistan fails to address the participation of the fiercely independent Baloch people, which has scaled up armed insurrections in Balochistan.
Historically, Balochistan was a princely state and once an independent nation under British Raj. Before the British colonialists quit India, signed its independence months before Pakistan’s independence in August 1947. Muslim League overzealous leaders invaded Balochistan in March 1948 with full knowledge of Mohammad Ali Jinnah, founder of Pakistan.
Gwadar has been leased to China for 43 years and the prospect of the Chinese navy converting the port into a strategic naval base will invite greater security issues.
China which they do not hide its grand plan to expand its maritime presence in the Arabian Sea and the Gulf of Oman – a major strategic global oil trade route.
The United States and its allies in the Gulf reckon China’s hegemony in the Gulf has been deemed a security issue of the oil route.
America thinks the presence of the Chinese navy will provide military backup to Iran’s naval patrol in the Persian Gulf, from yet another Chinese-built Chabahar port in Iran, not far from Gwadar.
Earlier, Communist China for decades propagated on its state radio that the United States, Japan, Britain, and European countries are economic imperialists, warmongers and backed autocratic regimes in third-world countries.
Several think tanks argue that China has become an economic giant and a new superpower – the neo-economic imperialist or another “East India Company”.
A British popular tabloid newspaper The Sun claims that China is “colonizing” smaller countries by lending them massive amounts of money, which they can never repay.
Developing countries from Pakistan to Djibouti, Maldives to Fiji, all owe huge amounts to China. Countries around the world owe huge sums to China and have fallen into a debt trap.
Some political scientists are calling it “debt-trap diplomacy” or “debt colonialism” offering enticing loans to countries unable to repay, and then demanding concessions when they default.
Alarm bells are ringing for Pakistan’s public debt is piling up, while a new narrative taking shape in the West that the BRI is creating a debt trap for developing economies, many are quick to link Pakistan’s ballooning debt to loans incurred under the CPEC.
Pakistan will have to pay back $100 billion to China by 2024 of the total investment of $18.5 billion, which China has invested on account of bank loans in 19 early harvest projects, under CPEC.
Nevertheless, Pakistan elites and media hype boast CPEC has the potential for a dramatic impact on Pakistan’s economy, but this transformation would come at a heavy price of making Pakistan a colony of China. Piling up loans from China is a big gamble for Pakistan’s economy, writes Abdul Khaliq, a debt analyst.
As China makes inroads into Pakistan, the government has given sweeping tax exemptions to Chinese companies, a situation which is creating a damaging and discriminatory playing field against Pakistani business entrepreneurs virtually abolishing the remaining locally owned manufacturing sector in the country.
In fact, Pakistan heavily relies on CPEC and has put all its eggs in one basket. Piling up loans from China and building too many hopes in the CPEC may be a big gamble for Pakistan’s economy.

First published in The New York Editorial, 18 November 2022
Saleem Samad, is a South Asia Special Correspondent for the New York Editorial. He is an independent journalist based in Bangladesh. He is a recipient of the Ashoka Fellowship and the Hellman-Hammett Award and is a correspondent of the Reporters Without Borders (@RSF_inter). He could be reached at saleemsamad@hotmail.com; Twitter: @saleemsamad

China ‘belting’ Pakistan on the road to debt trap

Gwadar Port in Pakistan occupied Balochistan

SALEEM SAMAD

The political debacle of the ambitious Gwadar International Port built by the Chinese is yet to be fully operational in Pakistan. It was found that the challenge was unbearable and that the threat perception has increased in the Balochistan province.

The security threat posed by Baloch separatists and armed nationalists demanding the independence of Balochistan has caused a ripple of fear for the future of the Gwadar Port and its connectivity with Central Asia.

Recently, “all-weather friends” China and Pakistan signed a precursor deal to develop the Karachi coastline at the cost of $3.5 billion -- what is being called another debt trap. China’s shift from Gwadar to Karachi has prompted Pakistan’s prime minister Imran Khan to dub the “jackpot” project “a revolution” in his Tweet to develop Karachi’s coast.

China puts strategy over investment and ignores profits. The Chinese Communist Party’s leadership has shifted from high-risk lending to hedging its bets. China’s President Xi Jinping’s Belt and Road Initiative (BRI) project seems to have hit a speed bump after reaching Gwadar. In fact, BRI is losing steam. Malaysia has cancelled projects worth $11.58bn. Similarly, Kazakhstan shook their head to say no to a $1.5bn investment, followed by Bolivia, which has turned down projects worth $1bn.

Some countries admit that they have fallen into a debt trap and the mega infrastructure is being colonized, like the $306.7m Hambantota International Port in Sri Lanka built by China in November 2010.

In 2016, a 70% stake of the port was leased to China Merchants Port Holdings Company Limited (CM Port) for 99 years for $1.12bn. The lease has recently been questioned by Sri Lankan President Gotabaya Rajapaksa, who now wants the port back.

Nearly 35% of the projects are struggling with corruption and protests, while several other countries are contemplating quitting BRI debt trap projects. Many countries where China has offered ambitious BRI proposals could not contemplate where and when they were going to fall into a debt trap. Pakistan is one of them. They know where the trap is. The Sunni Muslim majority nation knows they are falling into China’s debt trap. Despite the debt trap, a strong pro-Chinese lobby promotes Chinese megaprojects, while the politicians have to swallow the Chinese red pills.

The $62bn Gwadar project envisages linking with the persecuted Uyghur Muslims in East Turkistan (now Xinjiang Province) of China, and is being built through disputed territory in Gilgit-Baltistan, Pakistan-administered Kashmir, and Balochistan. Balochistan was once an independent country, before Pakistan’s independence in 1947 and its forcible occupation in March 1948.

Recently, China is extremely concerned about the safety and security of its personnel engaged in construction in China-Pakistan Economic Corridor (CPEC) projects, including the Karakoram Highway linking with Gwadar.

Gwadar has been leased to China for 43 years and the prospect of the Chinese navy converting the port as a strategic base will invite greater security issues, as China has a grand plan to expand its maritime presence in the Arabian Sea and the Gulf of Oman --  a major global oil trade route.

The United States and its allies in the Gulf reckon China’s hegemony in the Gulf will be a security concern. America thinks the presence of the Chinese navy will provide military backup to Iran’s naval patrol in the Persian Gulf, from yet another Chinese-built Chabahar port in Iran, not far from Gwadar.

First published in the Dhaka Tribune, 9 November 2021

Saleem Samad, is an independent journalist, media rights defender, and recipient of the Ashoka Fellowship and Hellman-Hammett Award. He can be reached at <saleemsamad@hotmail.com>; Twitter @saleemsamad

Why Bangladesh should have nothing to do with Gwadar Port

Balochistan, once an independent nation has remained occupied by Pakistan

SALEEM SAMAD

A columnist has urged that Bangladesh should use the controversial Gwadar port located in Pakistan occupied Balochistan to benefit from trade, commerce and shipping. The multi-billion-dollar port built by China–Pakistan Economic Corridor (CPEC) and other projects worth $62 billion as of 2020 has invited miseries and agonies for the fiercely independent Baloch ethnic community.

The occupied province of Balochistan is the only resource-rich region in a militarised nation – Pakistan. It possesses minerals including coal, sulphur, chromite, iron ore, barites, marble, quartzite, and limestone. It has the largest reserves of copper and gold in the world besides being blessed with huge oil and gas reserves. Gwadar port, it is said, has brought a new dream for the region.

The columnist possibly has undermined the political wisdom of Bangladesh prime minister Sheikh Hasina. He has failed to read the mind of Hasina.

She is presently not willing to improve diplomatic ties with Pakistan unless the country makes a public apology for war crimes committed causing deaths to three million, mostly Hindus by the Pakistan military during the bloody birth of Bangladesh independence in 1971.

The article published in Pakistan media is written based on half-hearted research and poor understanding of the region. He suggested that Bangladesh should use the Gwadar port to boost trade and can reach Western China, Central Asia, Pakistan easily.

The ambitious Silk Route project, a brainchild of China constructed a 1,300 km long expressway, the Karakoram Highway (or China-Pakistan Friendship Highway) connects two persecuted nations – the Baloch in Balochistan and Uyghur Muslims of Xinjiang province in China.

On the ploy of the friendship highway to reach China, Pakistan has forcibly taken administrative control of the picturesque Gilgit-Baltistan. The princely state has borders with Jammu and Kashmir, Ladakh in India and China. After reaching the border, the highway connects Xinjiang in Western China. There is no connectivity to Central Asian countries (Uzbekistan, Tajikstan, Kyrgystan and Kazakhstan) as Chinese hegemony has ushered in dispute with the countries of the former Soviet Union (USSR). The CPEC, a debt trap project for Pakistan, the KKH expressway is built to reach the Gwadar Port through the heartland of restive Balochistan.

Balochistan, once an independent nation has remained occupied by Pakistan with full knowledge of its founder Mohammad  Ali Jinnah. When the Baloch nation gained its independence [on 11 August 1947] from British Raj, before the independence of Pakistan, Jinnah persuaded the Khan of Kalat (Balochistan) to merge with Pakistan.

Meanwhile, the Parliament of Balochistan twice rejected the proposal of the annexation of Balochistan with Pakistan by an overwhelming majority.

Jinnah was incidentally a lawyer of Khan of Kalat and others and appeared on behalf of them in Karachi High Court. He knew the weaknesses and secrets of Kalat’s business and state properties.

Later, Jinnah succeeded in deceiving some key leaders and tribal chiefs of Balochistan in signing the agreement of their political will to merge with Pakistan.

The majority members of the Balochistan parliament condemned the action and petitioned the Pakistan government of its illegal accession agreement signed by some leaders who were dubbed as ‘betrayal’ against the Baloch.

Soon after, the Pakistan Army brutally occupied the territory on 27 March 1948, which is observed as ‘Black Day’ and the rebellion launched by mainstream tribal groups to bifurcate Balochistan from Pakistan occupation.

Pakistan security forces continue to commit atrocities in Balochistan. Tens of thousands are victims of enforced disappearances and are a regular phenomenon in restive Balochistan.

Balochistan grievances with Pakistan began from the denial of a fair share in the natural resources and the unabated persecution of Baloch ethno-nationalists.

The dirty war in Balochistan erupted after Pakistan’s military dictator Pervez Musharraf send commandos and helicopter gunship to raid the cave of ethno-separatist rebel leader Nawab Akbar Bugti was camped his military headquarters. The raid brutally killed him in 2006 and his death sparked a bloody wave of Baloch insurgency.

Islamabad often claimed that they have evidence of Indian hand and Afghanistan intelligence in the supply of weapons to the Baloch insurgents, which Delhi always denied.

In June 2020, the Pakistan National Assembly in Islamabad heard the Balochistan National Party’s Chairperson Akhtar Mengal scathing speech and asked that the province that he represents be declared “occupied Balochistan” if the state wants to continue its human rights abuses in what is currently a “no-go area” spearheaded by “death squads.” Without naming the military, Mengal castigated the crackdown in Balochistan, and the growing number of missing persons, which has reduced the locals to mere “bloody civilians.” Drawing parallels with Bosnia, Palestine, and Kashmir, the lawmaker accused the state of colonising Balochistan, rendering the blood of the Baloch “less worthy than tomatoes.”

To conclude, China has usurped Hambantota port in Sri Lanka after the latter failed to pay the debt. In near future, Gwadar port will fall through the cracks of the debt trap.  According to Pakistan’s mainstream newspapers, there are serious doubts that the ports will become a regional trade hub in the region.

First published in the International Affairs Review, 7 October 2021

The author is an independent journalist, media rights defender in Bangladesh. Recipient of Ashoka Fellowship and Hellman-Hammett Award. He could be reached at saleemsamad@hotmail.com; Twitter: @saleemsamad