Now, China is financially big enough to first pump its money in small, poor nations and then acquire controlling stakes in organizations as the nations fail to repay, be it the poor or financially weaker nations of Asia or Africa.
China is known for territorial expansionism and autocratic rule but its increasing economic prowess has added another dimension to its clout – the economic imperialism. Now, China is financially big enough to first pump its money in small, poor nations and then acquire controlling stakes in organizations as the nations fail to repay, be it the poor or financially weaker nations of Asia or Africa.
That is a deepening line of analysis by the experts. Confirming similar developments, an exclusive Reuters report has claimed that China is expected to take controlling stakes, as high as 85 per cent, in Myanmar’s China funded projects, even if the initial agreement for some of them was on a 50/50 basis. According to the report, China has asked for a 70-85 per cent stake in a strategic deep sea strategic on the Bay of Bengal, Kyauk Pyu, and is expected to get it due to the financial constraints of Myanmar. The $7.3 billion project is China funded.
The deep sea port fits in the Chinese narrative of its ‘One Belt One Road’ initiative under which it is pumping huge sums of money in financially weaker countries like Sri Lanka, Pakistan, Bangladesh, Nepal, or Myanmar, albeit, at much higher interest rates. If the international line of credit by different organizations or countries for soft loans ranges from 0.1 per cent to 3 per cent, the Chinese lenders charge anything above 6 per cent. In 2015, Japan sanctioned a loan amount of $50 billion with interest rate of 0.1 per cent and a repayment period of 50 years for India’s Mumbai-Ahmedabad bullet train corridor.
CHINA’S HEGEMONIC DESIGNS
In case of Myanmar, the Myitsone dam project is a classic example to see China’s hegemonic designs through economic imperialism. The $3.6 billion dam project was financed by China. Built on the Irrawaddy River, the project was doomed from the beginning. After being in making for years, the project was suspended in September 2011 amid democratic reforms as the Burmese Junta government had taken a unilateral decision to allow the controversial project that was expected to bring cultural, environmental and sociological disaster for Myanmar and its people. The ethnic Burman majority of Myanmar is against any dam on the Irrawaddy River as it traces its roots of civilization there.
Add to it the cunning Chinese business model. The project was sold saying the electricity it would produce, 90 per cent of it would be sold to China while 10 per cent was to be given free to Myanmar. Being a power starved country, protests were held against it in Myanmar. Under pressure, China later said Myanmar was the primary market and rest was to be exported. That was when Myanmar is among the countries with lowest electrification rate and no grid structure to connect its cities and town. A World Bank report says only 33 per cent of the country’s population has an electricity connection.
Now, China is using this junked project that has displaced thousands of people to leverage its position in Myanmar or we can say, to blackmail the Myanmarese government. If Myanmar finally cancels this project, it would have to return China $800 million that would hit it badly. Or the way China wants it, i.e., “concessions on other strategic opportunities in Myanmar – including the Bay of Bengal port Kyauk Pyu”, as the Reuters report says.
CHINA HAS A BAD REPUTATION IN MYANMAR
Another large scale project in Myanmar that is on the radar of China’s hegemonic designs is Kyaukphyu Special Economic Zone in one of its poorest regions, Rakhine. This $10 billion project is also China backed. China has also taken a controlling stake in another industrial park. China even owned 80 per cent of Myitsone dam project with Myanmar’s share just at 15 per cent. China has a bad reputation in Myanmar, especially about its hegemonic designs and exploitative nature, and large scale protest have been held against it.
Earlier this week, an Indian publication, The Economic Times, had come up with a report that “how China was putting some South Asian countries on the road to debt trap under its One Belt One Road initiative”. The report was focused on Pakistan and Sri Lanka. The report showed that how Chinese firms are pumping up money in these countries at unusually higher interest rates. When countries see that they are not able to repay, they convert their debt into equity and that literally translates into the ownership of the lender, i.e., China here.
This is already happening in Sri Lanka where Hambantota Port and Mattala Airport, both strategically important, especially for India, have gone into China’s control. Sri Lanka took Chinese loans for these projects and could not repay. Like Myanmar, even in Sri Lanka, violent protests were held when Hambantota went to China.
And experts say Pakistan is going to meet the same fate. Everyone in Pakistan nowadays talks of the China Pakistan Economic Corridor (CPEC) like a panacea for Pakistan’s every misery. China has promised a $50 billion line of credit for the CPEC that is expected to bring economic miracle in China. But the truth is, as per the experts, Pakistan is borrowing heavily from China and at much higher interest rates. Anyone can expects the future if CPEC fails.
And all these countries are in India’s neighbourhood. So, India has a valid reason to get worried, especially after the historically hostile attitude that China has harboured against India. China has always tried to encircle India by increasing its presence in the South Asian countries.
India has vocally opposed the CPEC and has been apathetic toward the One Belt One Road initiative. And now even Bangladesh and Nepal are realizing the Chinese designs. Bangladesh has backed out from an international summit that China is holding on the One Belt One Road initiative while Nepal has decided to send its deputy prime minister in place of its president.