Hambantota Port of Sri Lanka (Photo Courtesy: Xinhua News)
The ANR posted an article originally carried by NY Post and regrettably poisoned with this media's arrogance and prejudice. The article titled "How China is Buying the World" is full of untrue statements and groundless speculations, wantonly attacking the cooperation between China and Sri Lanka as well as several other countries, and once again hyping up the "Chinese Debt Trap" fiction.
To set the record straight, we would like to share the following observations:
Firstly, it is without question that people in Asia, Africa and Latin America have the right to pursue development and a better life. While infrastructure plays a key role in the economic development of developing countries, in most cases it is also a difficult task. Proper financing, one of the normal economic activities, is a crucial tool when it comes to state-to-state cooperation in this regard.
In China's case, cooperation with fellow developing countries financed by concessional loans has always been guided by the principles as follows: first, the cooperation is carried out in response to the needs of the partner countries and through extensive consultation. Second, the projects are intended to help developing countries solve the bottleneck of the economic development and seek improvement of people's livelihood. Third, the loans discussed are at low interest rates, with long grace and pay-back period and no strings attached.
Take the Sri Lankan port of Hambantota for an example. As is indicated in a briefing paper titled "Evolution of Chinese Lending to Sri Lanka Since the mid-2000s - Separating Myth from Reality" authored by Umesh Moramudali and Thilina Panduwawala, two scholars from Sri Lanka, and published by Johns Hopkins University in November 2022, Hambantota is among Sri Lanka's poorest regions with regular droughts. Following the December 2004 tsunami, urgency grew for infrastructure development in the coastal regions, including Hambantota. Thus the promise of an international port in Hambantota was included in the 2005 presidential election manifesto. However, although certain western companies recognized the feasibility of this project, Sri Lanka was unable to find partners in them. It was in this context, that the China Harbour Group, a partner in reconstructing the Hambantota Fisheries port as part of post-tsunami reconstruction efforts, later took up the Hambantota International Port project.
As one can see from this example, it is precisely because the Belt and Road cooperation addresses the urgent development needs of host countries and delivers livelihood-enhancing outcomes, it has been widely welcomed globally after its inception in 2013. To date, over three quarters of countries around the world and 32 international organizations have joined the initiative. The BRI has galvanized nearly US$1 trillion of investment, established more than 3,000 cooperation projects, created 420,000 local jobs, and helped lift almost 40 million people out of poverty. It goes without saying that national sovereignty is the most cherished by every country in Asia, Africa and Latin America since their independence movements. If those having BRI cooperation with China will inevitably be propelled to the abyss of being bought by China, how come an increasingly enlarging membership of the initiative?
Secondly, China should be the last one to be accused of the so-called "debt trap". In August 2022, Sri Lanka's Foreign Minister himself said that debt to China only accounted for 10 percent of Sri Lanka's external debt. The aforementioned two scholars also pointed out that Chinese debt is not the largest contributor to the rise in Sri Lanka's large external debt servicing obligations.
A major driver of Sri Lanka's increased commercial borrowings was dollar denominated International Sovereign Bonds(ISBs) or Eurobonds with higher interest rate borrowed from international capital markets. By end-2021, Sri Lanka had US$ 13 billion in ISBs, about 35 percent of total government foreign debt. The reason for Sri Lanka to turn to the international capital market was because the World Bank, the Asian Development Bank, Japan, the United States and some other bilateral partners are offering increasingly stringent lending conditions and fewer concessional loans.
According to World Bank statistics, as far as the data can be obtained, multilateral financial institutions and commercial creditors account for three-quarters of the $696 billion of external debt of 49 African countries, making them the biggest source of debt burden. Particularly, since last year, the unprecedented, rapid interest hikes by the US have led to capital outflows in many countries and worsened the debt problems in the countries concerned.
On the contrary, China has been making efforts to help the countries in distress. It signed debt relief agreements or reached consensus with 19 African countries and is the biggest contributor to the G20's Debt Service Suspension Initiative. China is also believed to be the first official bilateral creditor to have taken the initiative to announce debt extension to Sri Lanka. This fully speaks to China's action to support Sri Lanka's effort to achieve debt sustainability.
And the claim that China debt-trapped Sri Lanka into handing over the Hambantota port just couldn't be more preposterous. A rumor fabricated with ulterior motives. The port lease was never a debt-to-equity swap. The event of default clauses in the Hambantota Port China Eximbank loans did not feature any asset seizure clauses and the port assets were not included as collateral. Ranil Wickramasinghe, the current President of Sri Lanka said in a local media interview on July 20, 2020 that "leasing Hambantota Port greatly assisted to improve Sri Lanka's economic situation.... [and] also helped Sri Lanka to record a primary surplus and strengthen foreign currency reserve position." Obviously it is a joint venture conducive to both sides and facilitates Sri Lanka's plan to become a logistics hub in the Indian Ocean.
Thirdly, developing countries deserve to be treated as equal partners. The disinformation about China has been repeatedly hyped up by certain Western politicians and media for the purpose of shirking responsibility and misleading public opinion.
To one's relief, leaders and media with a sense of justice, particularly those of developing countries, have seen through these cunning tricks. According to them, the fact that some western countries have repeatedly denigrated China's cooperation with developing countries in Africa, Latin America and the Asia-Pacific, is actually a reflection of how these countries belittle the latter, as if the developing countries do not have the ability and wisdom to enter into an agreement that serves their interests but keep falling into the so-called traps. As if the developing countries do not qualify in engaging in global cooperation, but merely act as pawns of power politics.
No financial agreement is signed blindfolded. The developing countries are able to take care of their own interests and the fabricators of the "debt trap" lies should just stop bossing around. Indeed, if these countries themselves cannot offer real help to developing countries, they should at least maintain a healthy attitude towards fruitful cooperation among others.
For China and Antigua and Barbuda, this year marks the 40th anniversary of the establishment of our diplomatic ties. Over the past four decades, our two countries have always been each other's important partner. With the completion of bilateral cooperation projects, be it Sir Vivian Richards Stadium and Sir Lester Bird Medical Center, or VC Bird International Airport and St. John's Deepwater Harbour, it is the local economic and social development that has been benefited and the local people's actual needs that have been met.
As we would be pleased to see more countries join China in conducting practical cooperation with Antigua and Barbuda on the basis of mutual respect, equality and mutual benefit, we also hope that certain media houses would be more professional by respecting the facts and abandoning false narratives.