Western coverage gets hysterical as China’s economic influence grows

Ensuring Socio-economic Justice

Crescent International

Dhu al-Qa'dah 28, 1442 2021-07-09

Daily News Analysis

by Crescent International

As China continues to increase its economic and political influence, Western think-tanks and the corporate media continue to frame Beijing’s activities as debt enslavement aimed at gaining political leverage.

A recent study published by the Peterson Institute for International Economics (PIIE) is the latest attempt to frame China’s foreign economic involvement as a form of imperialism.

Commentary published in thediplomat.com said the PIIE “study assembled a dataset of 100 debt contracts, including borrowers in 24 countries and amounting to $36.6 billion, out of a universe of some 2,000 contracts over the last 20 years.”

PIIE’s study frames Chinese foreign economic participation as an attempt by Beijing to lend money at a disadvantage to borrowing nations and place China at a significant advantage.

This is not breaking news.

In the commentary on PIIE study, Robert Farley, assistant professor at the Patterson School of Diplomacy and International Commerce states that “debt has often been used for coercive political purposes in international politics, more often than many theories of international politics are quite comfortable with.”

Western financial institutions are notorious for taking advantage of developing countries.

The World Bank's and IMF’s Structural Adjustment Programs (SAP) are well known for increasing poverty in many developing countries while benefiting Western lenders.

Western loans and financial packages are highly politicized.

Just a few months after Sudan’s supposed civilian government which is heavily influenced by its military junta, recognized the Zionist occupation of Palestine, Khartoum received approval from the IMF for relief on more than $56 billion in debt and new funding of $2.5 billion over three years.

At the same time, Lebanon which is one of the few Arab countries with a decades long electoral process, government coalition building tradition and a vibrant free press, has not received a penny from the IMF.

Would the despotic regimes in the Arabian Peninsula enjoy the perks of modern economic mechanisms if they did not toe the political line of NATO regimes?

Prior to PIIE’s report, Western corporate media regularly mentioned the case of Hambantota, the Sri Lankan port built by China, as an example of Beijing’s debt trap.

However, Umesh Moramudali, an economic researcher focusing on public debt dynamics and economic development in Sri Lanka, explained the Hambantota case differently.

According to Moramudali, “it is incorrect to claim that China acquired Hambantota port because Sri Lanka failed to pay off the debt obtained to construct it.

“The often quoted ‘port deal’ was actually a lease agreement clearly separate from the loans obtained for the purpose of constructing the port and the money obtained from the lease was used to strengthen the foreign reserves of the country, not to repay China.

“There was no cancellation of debt, although the port was leased to China for 99 years.

“There has been no change in ownership. However, as per the lease agreement, a significant portion of port operations will be handled by China Merchant Port company, thus a large portion of the profit, if any, will be earned by CM Port.”

As China’s global economic influence grows, so will its political clout.

It will attempt to maximize its influence just like Western regimes have done for decades through their economic institutions.

However, China’s track record in its lending is far cleaner than that of most Western regimes.

Undoubtedly China will use its economic power for political purposes.

Western coverage of China’s economic policies, however, will always be projected through the prism of containing China.

Thus, it cannot be taken at face value.