VSCommunist China likes to pretend that it only seeks “win-win” cooperation with the rest of the world. For some of the world’s poorest nations, however, “win-win” might as well translate to “beware of loan sharks.”
The lesson was not learned easily.
When in 2013, China began investing hundreds of billions of dollars in its global Belt and Road investment initiative, many governments were enthusiastic. They sensed an opportunity to boost their economies and infrastructure with few obvious downsides. After the 2010 recession, the attraction of Chinese foreign investment brought added value. British Prime Minister David Cameron, for example, has proclaimed a new “golden age” in relations with Beijing and has gone to great lengths to woo Xi Jinping. The Chinese president was even feted with a state visit to London in 2015 (during which Xi’s delegation sought to insult as many British officials as possible).
Where some Western economies balanced their relative wealth to withstand the harsher edges of Chinese investment, others greedily accepted the devil’s bargain born of communist gold. Focused on car exports to the communist giant, Germany is now more Beijing’s ally than a founding member of the European Union. Other European powers are also struggling to resist China’s poisonous flirtations.
Yet it is the poorest countries like Pakistan and countries across Africa that are hardest hit.
From bribing politicians to approve projects to importing Chinese workers to do jobs that locals might otherwise do, Chinese companies have earned growing scorn. Poor quality work exacerbated these tensions. In 2017, for example, a Chinese-built bridge in Kenya collapsed. And when nations are unable to repay their loans, China threatens to take control of their critical assets. Control of Uganda’s main international airport is now seated at the Chinese mercy.
Of course, for Xi, the end justifies the means.
When it comes to debt diplomacy, the end is entrenched political loyalty. The Chinese Communist Party has bet that if it gives enough money to enough foreign officials and business interests, it will be able to leverage that money for absolute political loyalty. It is a strategy that has merit, if not morality.
Take Pakistan. Once a proud Islamic democracy, Pakistan now exists as a de facto colony of the Chinese communist empire. Pakistani politicians might speak out against the supposed injustice of Western policies towards Muslims and associated concerns over blasphemy, but not over China’s genocide against its Uyghur Muslim population. Instead, Pakistani diplomats appear to receive their talking points directly from the Chinese Foreign Ministry.
But the political costs are increasingly difficult for governments to avoid. Djibouti offers an example.
Like Mark Green observed in 2019, “Djibouti’s public debt reached around 80% of the country’s GDP (and China holds the lion’s share), putting the country at high risk of debt distress. The fact that China’s first and only overseas military base is located in Djibouti is a consequence, not a coincidence.”
In 2021, the limited economic benefits that China has brought to Djiboutian citizens have led the government of the small nation to face pressure on its relationship with Beijing. The racist treatment of African migrant workers in China has also done little to advance Beijing’s “win-win” narrative.
The cancellation strategy for the West should therefore be to offer alternative loans and partnerships with foreign nations. But unlike China, it must do so in a way rooted in the rule of law, democratic accountability and the clear benefit of the people.
This way, the West can show that betting on the new powerhouse may not be so beneficial after all.