Communist China loves to pretend that it seeks only “win-win” cooperation with the rest of the world. For some of the world’s poorest nations, however, “win-win” might as well translate as “beware loan shark.”
The lesson hasn’t been learned easily.
When, in 2013, China began investing hundreds of billions of dollars in its global “Belt and Road” investment initiative, many governments were excited. They sensed an opportunity to boost their economies and infrastructure with few obvious downsides. Recovering from the 2010 recession, the appeal of China’s foreign investment carried added value. British Prime Minister David Cameron, for example, proclaimed a new “golden age” in relations with Beijing and made great efforts to woo Xi Jinping. The Chinese president was even feted with a 2015 state visit to London (during which Xi’s delegation sought to insult as many British officials as possible).
Where some Western economies have balanced their relative wealth to resist the harder edges of Chinese investment, others have glutinously accepted the devil’s bargain born of communist gold. Fixated on car exports to the communist giant, Germany is today more Beijing’s ally than it is a founding member of the European Union. Other European powers also struggle to resist China’s poisoned flirtations.
Yet it is poorer nations such as Pakistan and countries all across Africa that face the brunt of the burden.
Whether by bribing politicians to approve projects or importing Chinese workers to do jobs that locals could otherwise do, Chinese companies have earned themselves growing disdain. Shoddy workmanship has exacerbated these tensions. In 2017, for example, a Chinese-constructed bridge in Kenya collapsed. And when nations are unable to repay loans, China threatens to seize control of their critical assets. Control over Uganda’s main international airport now sits at Chinese mercy.
Of course, for Xi, the ends justify the means.
When it comes to debt diplomacy, the end is entrenched political fealty. The Chinese Communist Party has gambled that if it throws enough money at enough foreign officials and business interests, it will be able to leverage that money for absolute political loyalty. It’s a strategy with 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 rail against the supposed injustice of Western policies toward Muslims and associated concerns over blasphemy, but not when it comes to China’s genocide against its Uyghur Muslim population. Instead, Pakistani diplomats appear to receive their talking points straight from the Chinese foreign ministry.
But the political costs are becoming harder for governments to avoid. Djibouti offers an example.
As Mark Green observed in 2019, Djibouti’s “public debt has risen to roughly 80% of the country’s GDP (and China owns the lion’s share), placing the country at high risk of debt distress. That China’s first and only overseas military base is located in Djibouti is a consequence, not a coincidence.”
In 2021, the limited economic benefit that China has provided to Djibouti’s citizens has led the tiny nation’s government to face pressure over its Beijing relationship. The racist treatment of African migrant workers in China hasn’t exactly helped advance Beijing’s “win-win” narrative either.
The countermanding strategy for the West, then, should be to offer alternative loans and partnerships with foreign nations. But unlike China, it must do so in ways that are rooted in the rule of law, democratic accountability, and the clear benefit of the people.
In that way, the West can show that betting on the new powerhouse might not be so beneficial after all.
