Bloomberg - Are you a robot?
www.bloomberg.com

Archived version

  • Communist-run Laos has come to the fore after it opened a high-speed rail line with China in 2021 that cost the landlocked country about $6 billion. While the development is seen by many as the start of a ramp up in infrastructure that directly connects China with Southeast Asia, it has raised concerns of a build-up in debt for Laos and other smaller countries.

  • China is by far Laos’ biggest creditor, accounting for about half of the $10.5 billion in external government debt. The tiny nation had $13.8 billion in total public and publicly-guaranteed debt at the end of last year, amounting to 108% of its gross domestic product.

  • Laos’ external debt payments in 2023 reached $950 million, almost double the amount compared to 2022, making the country defer $670 million in principal and interest payments. The World Bank has said in the past that such moves have provided temporary relief in recent years.

  • Laos’ development is seen by many as a further chapter of China’s ‘debt-trap diplomacy’ as Beijing offers developing countries financial loans under often opaque condition, leaving them grappling with repayments while it supports China’s efforts to expand its economic and political influence in foreign countries.

  • For example, Sri Lanka fell into default for the first time in its history back in 2022 after its foreign reserves dwindled. Last month the South Asian nation said it reached final restructuring agreements worth $10 billion, including with an Official Creditor Committee of bilateral lenders and China’s Exim Bank. Sri Lanka’s port, however, is now owned by China.

  • China dismissed the “debt-trap diplomacy” allegations.

    •  tardigrada   ( @tardigrada@beehaw.org ) OP
      1•4 months ago

      Did you read the article? The imperialistic government of China has been building such debt traps for a long time now, practically in the entire Global South, and there is much evidence that it is much worse than what the IMF/World Bank system did after World War II.

      The difference is that China first grant loans at opaque conditions that are favorable to China alone, not in tbe least because all these agreements are bilateral rather than multilateral.

      As one study in 2023 says:

      The authors also find that borrowing from Beijing in emergency situations is not cheap: Whereas a typical rescue loan from the International Monetary Fund (IMF) carries a 2 percent interest rate, the average interest rate attached to a Chinese rescue loan is 5 percent.

      “Our findings have implications for the global financial and monetary system, which we see becoming more multipolar, less institutionalized, and less transparent,” said [study co-author] Christoph Trebesch. “We see clear historical parallels to when the US started its rise as a global financial power, from the 1930s onwards and especially after World War II.”

      […] Beijing has created a new global system for cross-border rescue lending, but it has done so in an opaque and uncoordinated way,” said [study co-author] Parks. “Its strictly bilateral approach has made it more difficult to coordinate the activities of all major emergency lenders, which is concerning because sovereign debt crisis resolution usually requires some level of inter-creditor coordination.”

      Laos is another example in a long list of countries that provide a strong reasons to stay away from China’s Belt and Road Initiative or similar programs. You’ll find much more evidence across the web.

      •  taanegl   ( @taanegl@beehaw.org ) 
        1•4 months ago

        I’m sorry, I didn’t know comparisons made you this frustrated. Yes, yes. I know about China’s belt and road initiative, and their “central kingdom”… Have you heard of US imperialism and NATO?

        You brushed off IMF like it did nothing, but as someone who has actually written on the IMF and researched their loan programs, I can tell you to get stuffed. IMF’s loans were just as predatory - if even more so- and the real reason for the loans was so the default clause could be triggered.

        The intention was always robbing people of raw resources while some upper echelon politician walks away with a phat Cayman island bank account, leaving nations of millions with austerity measures and libertarian laws (as demanded by the default clause), which made sure there was no investment in infrastructure or actual growth in a country. There are African countries who are still in this debt trap, decades later.

        Why? Those sweet, sweet raw resources - sold at cost no less, as per loan agreement. “At cost” means no growth, no taxes, no actual economic activity, just pipe the resources onto containers and send them out of the country, while the slave labour that excavated it go back into poverty and squaler as their politicians grow fat behind gated communities. This is the perverse want that all “designer nations” want.

        Ask Caribbean nations. Choosing between US imperialist, or China imperialist, they choose none, but jokingly say that the Chinese will walk away politely when you reject them - whereas the US will make the CIA coup your fucking government.

        Shout outs to the CIA for holding a world record in government coups.

        •  tardigrada   ( @tardigrada@beehaw.org ) OP
          1•4 months ago

          I’m not frustrated, but this is simply another whataboutism which is unfortunately widespread here. One posts a report about a debt trap in Laos due to China’s belt and road, and the response is, “yes, but Nato, IMF, 'the West, …” followed by a wall of completely unrelated remarks.

          Interesting is that this whataboutism gies only in one direction. When someone criticizes the IMF, World Bank, or any Western institution, I never read, “But autocratic China, …”

          I don’t “brush this off like it did nothing”, it’s just off-topic. It’s blantant whataboutism, adding nothing to the topic. It’s a waste of time.

          •  taanegl   ( @taanegl@beehaw.org ) 
            1•4 months ago

            Its not a “whataboutism”. It is contrast. I do the same for articles that talk about western imperialism. Then I mention belt and road or Russian imperialism, to get people like you scream “WHATABOUTISM” because they are then in defence of “their guy”, having their enemy-mentality triggered as their trained response is vomited from their gullet. Academically speaking discussions can branch into relevant areas, in fact, you need that contrast to have a wider perspective on the problem, or else it’s just intellectual suicide and wankery.

            It’s not off topic, it is literally relevant to the same subject. If I were to talk about Chinese car manufacturing vs western car manufacturing, then it would be off topic. But no, we’re talking state to state loans through “non governmental” organisations with predatory and exploitative conditions attached. That is inherently relevant to the topic, but from different parts of the world. If you’re trying to say this sub isn’t political, don’t.

            What you’re essentially saying is I have to go make an adjacent repost on a western sub and then make it about IMF solely in the title? Each, in their corner, doing their circle jerk? Nuts to that weaksauce.