If You Want World Peace, Speak Up About China’s Lending Practices


An Op-Ed, By Jared DeVito

China has been debt-trapping numerous countries over the past decade, yet the majority of the world seems to be turning a blind eye to it.
John Adams said it best, “There are two ways to conquer a country: One is by the sword, and the other is by debt.” Currently, China is choosing the latter with 165 countries in debt to them.
A piece published by The Hill explains how government loans and IMF (International Monetary Fund) loans typically influence growth to build up other countries along with how China specifically chooses countries that they know can’t pay back the loans. This allows them to add insane clauses to the loans in case of default. Since most of these countries have no, or very little, track record of success, they’ll use other things such as imports, income taxes or land as collateral.
One prominent example of this is what went on in Tajikistan in 2011. Due to being unable to pay back a loan, China acquired nearly 1,200 square kilometers of land in exchange for the debt. Tajikistan still owes more than $1.5 billion to China, which is just shy of half of the country’s total debt.
An article from RadioFreeEurope reports that in 2019 the Tajik government made a controversial decision to hand over their silver mine in order to repay more debt. As the debt situation snowballs and worsens over time, the people of Tajikistan are the ones left to suffer.
What makes this issue increasingly difficult to fix is not only the amount of debt being handed out like candy, but the term structure of the contracts. A minute number of deals made with China aren’t even accessible to the public, and we genuinely have no idea how they’re set up and what is used for collateral.
China is able to acquire these countries’ most valuable assets by taking advantage of their desperation and desire to strive for better.
Tajikistan is not the only country on China’s debt-trapped countries list. Other countries such as Sri Lanka, Kyrgyzstan, the Maldives, Montenegro and Ethiopia are all current, or future victims of China’s tactics.
One characteristic that vastly stands out among this list of countries is that their financial circumstances are not good. These countries combine for less than 2.5 percent of the global GDP.
Khabarhub.com published an article stating, “According to the International Monetary Fund (IMF), China’s contribution to the public debt of indebted poor countries nearly doubled from 6.2 percent to 11.6 percent from 2013 to 2016.”
The entire philosophy that China has while distributing these loans out to borrowers is that their countries carry either enough natural resources, land of interest or physical assets that can be used as collateral and seized after default.
Despite most of the countries being financially destroyed, China acts as “aid” toward them as no one else will lend them money.
If we continue to allow China to operate this way, we will see an even larger global wealth gap, potentially more severe than our current wealth gap in our own country.
We see this in the United States on a smaller scale via PayDay loans, and now Buy-Now Pay-Later apps like Klarna where we lend money to people who cannot afford their next meal than charge an extreme amount of interest as most people don’t understand what they’re accepting as the desperation overwhelms them. These predatory lending tactics have always been heavily criticized and have only recently become outlawed slowly. Despite this, we’re yet to see any advance in regulating China’s predatory lending.
While we focus our attention on small-scale politics and other minuscule issues, we’re failing to see the bigger picture of China stealing the last pocket change out of the poor man’s pocket.
If we truly wanted to see some form of world peace or for everyone to truly have a chance to succeed, stopping these predatory practices is necessary as soon as possible, as they are crippling the poorest countries.
People claim to advocate for people in less fortunate situations and claim to truly care, yet no one is talking about the impact that this has on the future of the residents of these countries, let alone these tactics in general.