In the stories and novels we can find, those zamindar moneylenders, who grips the poor farmers in the net of debt and gradually embezzled the farmer’s land, housing, even the hut also.
That’s exactly what 21st century China looks like, at least according to the observers of the global economy.
According to some Western financial research institutes, China has overtaken the World Bank, the International Monetary Fund, and the United States in the amount of ‘rescue loans’ given to underdeveloped and developing countries. In the world – a total of 128 such loans given to 22 countries during the period 2008-2021 in Indian currency.
24 thousand crores! China’s influence as a lender, especially in times of crisis or as a last-minute savior, is expanding globally.
China is lending money to which countries? Mainly to underdeveloped and developing countries—its credit map includes many countries in a large region including Southeast Asia, Latin America and the Caribbean Islands, African countries south of the Sahara Desert, Pakistan Sri Lanka Laos Kyrgyzstan Mongolia Argentina Egypt Zambia Ghana etc.
It is known that more than forty countries owe more than ten percent of their GDP to China, in some countries at least twenty percent.
China’s interest rates are two to four times higher than those of the IMF, the World Bank or France-Germany, and the repayment period is much shorter.
Naturally, when low- and middle-income countries can’t pay their debts on time, China lends again and again, to pay off earlier debts.
The cycle appears to be ever-rotating but irreversible. Chinese projects are underway in major infrastructure sectors, including telecom ‘ ports, highways, railways, mines, of these countries and China is taking commercial takeovers of projects as countries default on loans.
For example, in 2017, Sri Lanka was forced to agree to hand over a 70 percent stake in the Hambantota port project to Chinese traders.
Many Western countries, including Britain, have been complaining that this lending is actually a Chinese trap, a net that can only be entangled, not cut out.
Debt is recognized as an important part of the financial system and economy as a weapon of geopolitics and diplomacy.
Experts say China’s lending has no official oversight, the process is opaque — rife with corruption and opportunism.
Allegations of violation of labor rights and human rights in Chinese projects in various countries are rampant, many projects are not environmentally friendly.
But those countries can’t take action against it, due to China’s constant influence.
It is like gaining the power to enter through the window of economy and open or close the door of politics as per one’s will, showing military muscle if necessary or opportunity which will take no time at all.