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CGD in the News

September 20, 2018

Maldives trapped in Chinese debts ahead of polls (The Asian Age)

By Shumona Sharmin Sharna 

From the article: 

The Maldivians are going to cast their ballots on 23rd September (Sunday) in the next general election of Maldives. Maldives is most likely to get under financial pressure if President Abdulla Yameen wins the polls because of some infrastructural projects in Maldives which are funded by Chinese debts. Maldives got much closer to China during the tenure of President Abdulla Yameen. China has financed roads, bridges and some other construction works in Maldives through loan-based contracts between Chinese and Maldivian sides.

Foreign affairs experts have said that Maldives is already trapped in Chinese debts ahead of the upcoming election. It goes without saying that China's Belt and Road Initiative (BRI) has meanwhile endangered some other countries with loans on stern terms and conditions. 

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Center for Global Development, an American institution has said that Maldives is very much at risk with China's Belt and Road Initiative. According to Center for Global Development (CGD), China's loans to Maldives have amounted to 1.3 billion USD which is higher than one quarter of Maldives' annual gross domestic product (GDP). 

Read the full article here.

 

September 20, 2018

Enter the Dragon: How invested is China in Pakistan? (SAMAA TV)

By Hisham Sajid 

From the article: 

The new government’s subtle, yet visible shift in policy has led to debate again over the short- and long-term benefits, and repercussions of the China-Pakistan Economic Corridor. 

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According to a report released by the Centre of Global Development, China will finance 80% of the projects under CPEC. This has to happen through loans which will have to be paid back with interest rates as high as 5%. The study evaluated the current and future debt levels of the 68 countries hosting BRI-funded projects. It found that of the 23 countries that are at a high risk of defaulting. In eight of those high-risk countries, future BRI-related financing is said to greatly increase the already high risk of default. Pakistan is one of these eight countries. 

Read the full article here

 

September 19, 2018

The Need for a More Nuanced Approach towards the BRI (IPP Review)

By Tridivesh Singh Maini 

From the article: 

While addressing the opening of the Forum of China Africa Cooperation (FOCAC), Chinese President Xi Jinping sought to allay fears of not just African countries, but other countries which are part of the Belt and Road Initiative (BRI). President Xi, while emphasizing the mutually beneficial synergies, did try to highlight some of the problems related to BRI albeit in a very subtle manner. In the context of China-Africa cooperation, President Xi fleshed out China’s key initiatives in the continent and highlighted the assistance which Beijing will be providing in areas like agriculture, green development, and education over the next few years. 

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While Africa’s dependence upon Beijing is increasing, concerns have been growing in certain quarters about the rising levels of debt in certain countries. According to a report released by the Centre for Global Development in December 2017, China’s share of debt in Djibouti, where Beijing has built an overseas military base, could rise from a staggering 85 percent to over 90 percent of GDP. Two of the big-ticket projects being funded and built by Beijing in Djibouti are a multi-purpose port at Doraleh and an international airport. Another country which is economically vulnerable according to the report is Kenya, where over 70 percent of the country’s bilateral debt is owned by China. Former US Secretary of State Rex Tillerson during a visit to Africa in March 2018 had stated that the US did not want to deny Africa access to Chinese financing, but African countries needed to be judicious and ensure that economic dependence on China does not ultimately impact their sovereignty in any way. 

Read the full article here

 

September 19, 2018

China Must Slow Down and Change Lanes With the Belt and Road Initiative (The Wire)

By Ravi Bhoothalingam 

From the article: 

These are not happy times for China’s Belt and Road Initiative (BRI). Just five years after China’s President Xi Jinping launched his signature multi-billion-dollar scheme for trans-Asian connectivity and infrastructure, its projects have aroused disquiet in Sri Lanka, Maldives, Myanmar, Malaysia and most recently in Pakistan. 

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In short order thereafter, concerns emerged about other Chinese projects. The Centre for Global Development, Washington D.C., published a study of 68 BRI-linked countries worldwide amongst which eight nations (including Maldives and Pakistan) were listed as ‘highly vulnerable to debt distress due to future BRI-related financing.’ Malaysia recently cancelled about $3 billion worth of BRI pipeline deal (where some Chinese-invested projects are entangled in a graft probe) and wished to renegotiate another – the prestigious East Coast Rail Link – with China. And right now, Pakistan has sought to ‘review or renegotiate’ parts of the $62 billion China-Pakistan Economic Corridor(CPEC). “Et tu, Brute!” might be China’s rueful response to its ‘iron brother’. 

Read the full article here

 

September 18, 2018

Maldives' Chinese debt and political risk could lead to trouble in paradise (Reuters)

By Alasdair Pal 

From the article: 

NEW DELHI - A victory for President Abdulla Yameen in a Sunday election in the Maldives could ramp up pressure on its finances, as the government stays the course on a Chinese-backed infrastructure boom that is in danger of swamping the economy. 

The Maldives under Yameen has grown closer to China - to the alarm of traditional ally India - with China funding roads, bridges and an extension to the international airport as part of its Belt and Road Initiative (BRI) of infrastructure projects in almost 70 countries from Mongolia to Montenegro. 

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The Maldives, a small economy heavily reliant on tourism, is one of the most at-risk countries of any involved with the BRI to the distress of debt, said the Center for Global Development, a Washington D.C.-based think-tank tracking the initiative. 

Read the full article here

 

September 18, 2018

Who is at risk from China’s Belt and Road Initiative debt trap? (Live Mint)

By Nikita Kwatra 

From the article: 

China’s Belt and Road Initiative (BRI) which seeks to invest about $8 trillion in infrastructure projects across Asia, Europe and Africa, has come under intense scrutiny, not least due to suspicions over China’s intent behind the ambitious project. A study by the Centre for Global Development, a Washington-based think tank, analyses one important consequence of BRI: debt.

While the study finds that it is unlikely that the BRI will be plagued with wide-scale debt sustainability problems, it is likely to raise the risk of a sovereign debt default among relatively small and poor countries. 

Read the full article here

 

September 17, 2018

African countries seek relief from Chinese loans (The East African)

By Allan Olingo

From the article: 

Some African countries are now seeking to write off their loans from China while others are offering concessions using their natural resources and assets to manage their ballooning debt.

A new report by the US-based Centre for Global Development shows that China’s loans to Africa, currently standing in excess of $14 billion, continue to rise, putting a strain on borrowers and posing the risk of default.

Read the full article here.

 

September 16, 2018

Warning Signs Hint at Dangers of Chinese Investment in Ukraine (Epoch Times)

By Frank Fang 

From the article: 

Ukraine and China have increased partnerships in recent years, as the former is badly in need of cash to bolster its infrastructure, while the latter wants to get its hands on Ukrainian technologies.

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According to a Sept. 2 article by The Bohr Times, a regional newspaper in Ukraine, the country’s public debt stood at $75.71 billion as of July 31. Its direct external debt stood at $37.51 billion.

It isn’t known precisely how much of Ukraine debt is owed to China, but according to a policy paper issued by the Center for Global Development, a Washington D.C.-based think tank, in March, Ukraine’s debt to China stood at $1.59 billion as of the end of 2016. 

Read the full article here

 

September 16, 2018

China Threatens Sovereignty of Several African Nations As It Takes Over Their Resources to Cover Debt (Atlanta Black Star)

By David Love 

From the article: 

It is no secret that China has increased its footprint on the African continent with heightened influence and economic, trade and security arrangements with various nations. On a positive note, this new relationship between the emerging Asian giant and African countries has been characterized as a mutually beneficial arrangement and a departure from the imperialist exploitation of Europe and the United States. However, in some cases, Sino-African cooperation may assume the look and feel of a lopsided deal, which some would regard as neocolonialism based on debt obligations that African nations cannot repay, rather than an economic partnership among equals. 

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The International Monetary Fund reported earlier this year that sub-Saharan Africa is experiencing a debt crisis, with 40 percent of nations in the region at a high risk of debt distress, and the number of countries unable to service their debt doubling to eight in the past year. According to a report from the Center for Global Development (pdf), Djibouti, Egypt, Ethiopia and Kenya are the African nations among 23 nations with a high risk of debt distress from Chinese financing. Djibouti is among eight countries with the highest risk of distress in the event of additional debt financing. 

Read the full article here.

 

September 16, 2018

China struggles with Belt and Road pushback (Modern Diplomacy)

By Dr. James M. Dorsey 

From the article: 

China, in an implicit recognition that at least some of its Belt and Road-related projects risk trapping target countries in debt or fail to meet their needs, has conceded that adjustments may be necessary.

“It’s normal and understandable that development focus can change at different stages in different countries, especially with changes in government. So China can also make some strategic adjustments when cooperating with these countries, but it’s definitely not a reconsideration of the B&R (Belt and Road) initiative,” Wang Jun, deputy director of the  Department of Information at the China Center for International Economic Exchanges told the Chinese Communist Party’s Global Times newspaper. 

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Earlier, the Washington-based Center for Global Development warned that “there is…concern that debt problems will create an unfavourable degree of dependency on China as a creditor. Increasing debt, and China’s role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI (Belt and Road initiative) countries.”

Read the full article here.

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