However, there are concerns that China will be able to use its leverage, over countries which owe it money, to extract strategic concessions (such as supporting China's territorial ambitions at the expense of their own, or agreeing to long-term contracts that might not be in their national interest): a practice known as 'debt-trap diplomacy'.[1]
The loans have, in some cases, included conditions such as a requirement to use Chinese contractors, which has inflated costs and reduced the benefit to the local economy. In other cases, there have been accusations that loans have been used to channel funds to companies owned by officials. In Sri Lanka, when the government asked to restructure repayments, China agreed—on the condition that it be given a 99-year lease on a strategically located port that it had funded.[2] GCHQ told us that the BRI was allowing China to change the rules in numerous multilateral fora:
So, the way in which China exerts its influence, we are seeing of course in Belt and Road, and that is a very physical thing but it is also a very virtual thing, it is the way in which technologies are being rolled out across the world … we are not nearly … fleet enough in thinking about how China is setting the standards for the world's technology … it is dominating the block-votes in some of the key standard-setting bodies; … [and] as part of its BRI diplomacy and its debt diplomacy, it is demanding the subservience of other countries to vote with them in these contexts. So they have a monopoly on a lot of the standard-setting bodies that we care about.[3]
Professor Steve Tsang described the Chinese approach towards regional and international organisations as being "instrumentalist", adapting such organisations to better suit China's priorities.[4] The Council on Foreign Relations describes China as undermining United Nations human rights mechanisms by downplaying individual rights and instead emphasising the importance of state-led development, national sovereignty and non-intervention. China has also been accused of trying to ensure that it received a favourable review of its human rights record from the Human Rights Council by threatening consequences for countries—and in particular BRI countries—that supported a negative view.[5] While there is a question as to whether China's overseas lending constitutes a deliberate ploy to trap countries in unsustainable debt, in October 2020 the Joint Intelligence Committee noted that China can use loans and renegotiations as leverage to advance its policy objectives, and that developing countries have often been eager customers for Chinese lending, as China typically has competitive prices, can disburse loans quickly, can lend at a scale required for many large infrastructure projects and has been willing to fund prestige projects.[6]
- ↑ 'What is China's Belt and Road Initiative?', The Guardian, 30 July 2018; 'China's Massive Belt and Road Initiative', Council on Foreign Relations, 21 May 2019.
- ↑ China signs 99-year lease on Sri Lanka's Hambantota port', Financial Times, 11 December 2017.
- ↑ Oral evidence—GCHQ, *** July 2019.
- ↑ Oral evidence—Professor Steve Tsang (SOAS), 9 May 2019.
- ↑ 'Is China undermining Human Rights at the UN?', Council on Foreign Relations, 9 July 2019.
- ↑ Written evidence—JIO, October 2020.
13
