Overseas, China springs the debt trap on loans to a dozen countries

American Thinker ^ | 05/22/2023 | Thomas Lifson

[SeekAndFind]

Even as high debts are impoverishing its local governments, China is playing hardball with foreign borrowers, many of them participants in the Belt and Road Initiative, who incurred massive debts to build infrastructure projects to connect their economies to China. Fortune Magazine, drawing on reporting from the AP, writes:

A dozen poor countries are facing economic instability and even collapse under the weight of hundreds of billions of dollars in foreign loans, much of them from the world’s biggest and most unforgiving government lender, China.

An Associated Press analysis of a dozen countries most indebted to China — including Pakistan, Kenya, Zambia, Laos and Mongolia — found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel. And it’s draining foreign currency reserves these countries use to pay interest on those loans, leaving some with just months before that money is gone.

Behind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help. On top of that is the recent discovery that borrowers have been required to put cash in hidden escrow accounts that push China to the front of the line of creditors to be paid.

Countries in AP’s analysis had as much as 50% of their foreign loans from China and most were devoting more than a third of government revenue to paying off foreign debt. Two of them, Zambia and Sri Lanka, have already gone into default, unable to make even interest payments on loans financing the construction of ports, mines and power plants.

[SeekAndFind]

A brand-new China-Laos railroad just began operation, built with borrowed funds.

When countries run out of foreign reserves owing to debts, the results can be catastrophic. The article mentions Pakistan, where over a million workers in the textile industry are out of work and basically starving because of an inability to import raw materials like cotton. In Kenya, civil servants are going without pay.

[butlerweave]

Load Sharks

[Tell It Right]

We should hammer China for not paying a penny for over half a century on $1.6 trillion in Chinese debt owed to American buyers of Chinese bonds.

[Vigilanteman]

Iceland is a model on how to successfully default on debt and keep the Banksters at bay.

[Rockingham]

This is where the hype about the BRICs meets the reality of China's thuggish approach toward other countries, even putative allies. Borrowing from China means that you have incurred debt to a regime that operates like a Mafia loan shark. If you cannot pay, they simply run your country into the ground like Tony Soprano doing a bust out on a friend who owes money.

[dfwgator]

Borrowing from China means that you have incurred debt to a regime that operates like a Mafia loan shark.

"Oh, the place got hit by lightning? F___ You, Pay Me!"

[If You Want It Fixed - Fix It]

Who’s fault is it....the crack dealer or the new crackhead?

[Rockingham]

“You pay me, lound eyes, or my man Chow will blake you legs!”

[Ban Draoi Marbh Draoi]

It is way past time to spring a few traps in them.