In ‘debt bondage’ to China - SupChina

In ‘debt bondage’ to China

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In what he describes as a “predatory approach,” Indian author and scholar Brahma Chellany says China has been turning its ability to lend money to smaller nations to secure highly favorable deals, using the recent 99-year lease for Sri Lanka’s Hambantota as a prime example.

  • While China seeks to portray its role in international development as creating win-win partnerships, Chellany explains, “Chinese loans are collateralized by strategically important natural assets with high long-term value (even if they lack short-term commercial viability)… In exchange for financing and building the infrastructure that poorer countries need, China demands favorable access to their natural assets, from mineral resources to ports.”
  • Similar tactics have been used to open China’s first overseas military base, in Djbouti, and Kenya’s port of Mombasa may soon share a similar fate as Hambantota.
  • Chellany notes the irony inherent in these relationships. “China is replicating the practices used against it in the European-colonial period, which began with the 1839–1860 Opium Wars and ended with the 1949 communist takeover — a period that China bitterly refers to as its ‘century of humiliation,’” he writes.

EARLIER THIS WEEK:

China’s ride-hailing giant secured $4 billion in new financing, following a $4.5 billion fundraising round earlier this year, and will earmark cash for global expansion and AI technology.  TechCrunch notes that Didi’s current valuation is now “likely higher than Uber’s most recent/ongoing round.”

China will shake up the global crude-trading scene when it launches its own yuan-based oil futures contract, which could happen as soon as the end of this year. However, foreign players may hold back given the unpredictable state of commodities markets in China.

China will create another major market in the coming years, when it launches the world’s largest platform for trading carbon emissions. Key details of the long-awaited initial phase of the plan were announced this week: It will be limited to the power sector and cover around 1,700 utility companies.

The Chinese internet giant announced that it will take a 5 percent stake in Yonghui Superstores, worth around $640 million, a month after rival Alibaba announced that it would make a $2.9 billion investment in Sun Art Retail, another supermarket chain.


Sky Canaves

Sky Canaves previously reported for The Wall Street Journal in Beijing and Hong Kong, where she covered media, culture, social issues, and legal affairs, and served as the founding editor and lead writer of the WSJ’s China Real Time site. Prior to becoming a journalist, Sky worked in the China corporate law practice of Baker & McKenzie, and she has also taught journalism and media law at the University of Hong Kong. She speaks Mandarin and has accumulated more than a decade's experience living, studying and working in China.