Comments by "D W" (@DW-op7ly) on "China Debt | What Sri Lankan Minster Said On China's Alleged "Debt Trap"" video.

@Pain-zd5uo Hambantota Port – Myths and Realities * Contrary to popular belief, the debt servicing costs on account of the loans obtained from Exim bank were not significant in the overall context of the external loan portfolio of Sri Lanka, with loan installments (including interest) amounting to less than five percent of Sri Lanka’s total external debt repayments. As the second phase of the Hambantota port project has not commenced, loans for this phase have not been obtained. Five loans for the port (excluding loans obtained for a bunkering facility project) were acquired in the period from 2007 to 2014. Including concessionary loans, the entire loan portfolio pertinent to the construction of Hambantota port amounted to $1.263 billion. One possible disadvantage to the concessionary loan structure could be that the payback period was not too long and had an in-built shorter grace period, but Chinese loans in such projects are regularly rolled over. The scandal surrounding the “Hambantota port sale” is not justified as the acquiring transaction was not contingent on default by Sri Lanka on its external debt to China’s Exim bank; rather it was a lease arrangement for a period of 99 years at a consideration of $1.12 billion. Sri Lanka has not transferred ownership of the port. The arrangement of the lease is distinct from loans pertinent to port construction and it is noteworthy that the lease was not accompanied by cancellation of debt due by Sri Lanka to China. Substantive port operations and accompanying revenues are now the exclusive domain of China Merchants Port Holdings Company (CMPort), which was transferred an 85 percent stake effective December 2017. For the sake of appearances, Sri Lanka retains a 15 percent stake in the joint stock company. Significantly, foreign countries are not permitted to use Hambantota's port facilities for military purposes without obtaining permission from the Sri Lankan government. Maritime-Executive
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@Pain-zd5uo Debunking the Myth of ‘Debt-trap Diplomacy’ How Recipient Countries Shape China’s Belt and Road Initiative As this section shows, there are many misconceptions in this conventional narrative. First, the Hambantota Port project was not proposed by China, but by the government of former Sri Lankan President (and current Prime Minister) Mahinda Rajapaksa, in cooperation with a profit-seeking Chinese SOE. Second, it was a commercial, not a geostrategic, venture, but one which created vast surplus capacity due to governance problems in Sri Lanka. The port was one of several ‘white elephant’ projects promoted by Mahinda Rajapaksa as part of a corrupt and unsustainable developmental programme. Third, Sri Lanka’s debt distress was unconnected to Chinese lending, arising instead from excessive borrowing on Western-dominated capital markets and from structural problems within the Sri Lankan economy. Fourth, there was no debt-for-asset swap. Rather, after bargaining hard for commercial reasons, a Chinese SOE leased the port in exchange for $1.1 billion, which Sri Lanka used to pay down other debts and boost foreign reserves. Fifth, Chinese navy vessels cannot use the port, which will instead become the new base of Sri Lanka’s own southern naval command. All these problems arose not from a carefully crafted top-down strategy, but rather as a result of the dynamics described in chapters 2 and 3 of this paper. ChathamHouse
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@Pain-zd5uo What is the volume of Chinese loans in Africa? According to Eugène Berg, ex-ambassador of France to Namibia and Botswana, “Between 2000 and 2018, 50 African countries out of 54 borrowed 132 billion dollars from China, of which 80% was from Ex-Im Bank of China and China Development Bank (CDB), in various forms. In 2018, China held nearly 21% of the continent’s outstanding external public debt, with many of these loans going to finance infrastructures whose relevance is questionable.” (source: Eugène Berg, La percée chinoise en Afrique a des effets délétères (China’s Entry Into Africa has Deleterious Effects), Le Monde, 31 December 2021, translation CADTM) The Chinese press agency Xinhua gives lower figures on the extent of Chinese loans: “A report published last July by the British NGO Debt Justice showed that 12 percent of the external debt of African countries is owed to Chinese lenders, compared to 35 percent to Western private lenders. The average interest rate of these private loans is 5 percent, compared with 2.7 percent for loans from Chinese public and private lenders.” Source: Xinhua, Key Facts U.S. Deliberately Ignores about African Debt, 7/02/2023. Cadmium
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