The recent rhetoric’s by Speaker Mohamed Nasheed on India’s “WION” news channel surrounding the debt owed by the Government of Maldives to China has reignited the debate on the topic of “Chinese Debt Trap”.
In his interview to the “WION” news channel, Speaker Mohamed Nasheed alleged that China is still actively working on getting back the repayment for the loans it disbursed to the Government of Maldives during former President Abdulla Yameen’s administration.
While this is not the first time the former President Mohamed Nasheed has made these allegations, the New Delhi friendly Speaker Mohamed Nasheed has consistently maintained that China will seize control over the State-Owned Enterprises and grab land from the Maldives if the Government of Maldives fails to repay their loans. During the 2018 Presidential Campaign and the 2019 Parliamentary Election campaign trail, Speaker Mohamed Nasheed along with current Health Minister Ahmed Naseem alleged that China had taken control of 16 islands in the Maldives for the development of military bases.
While none of these allegations have any factual backings, Speaker Mohamed Nasheed himself have on several occasions contradicted himself regarding the “Chinese Debt Trap”. On 27th October 2020, Speaker Mohamed Nasheed stated within the Parliament Chambers that “China will not seize state assets even if the current administration fails to repay the Chinese loans”.
The notion that China is out to gain control and colonize other independent states though “Debt Trap” is a rhetoric originating from the west. As China gains popularity and influence over global politics through its mutual benefit beneficial development programs, western states including the U.S. continue to lose their influence and support. This ultimately led to the rhetoric that the Chinese development offers, grants and loans are a “Debt Trap”, which was then adopted by current ruling party Maldives Democratic Party (MDP) which has close ties to India and by proxy the U.S.
One instance of the “Chinese Debt Trap” rhetoric being used to undermine China’s popularity was witnessed in the virtual trip by U.S. Secretary of State Antony Blinken to Africa back in February 2021, which was marked with his strong sentiments towards the Chinese-African development projects. Similar to his predecessors Mike Pompeo and Rex Tillerson, Secretary of State Antony Blinken touted the “Chinese Debt Trap” through what some have described as “kindergarten mathematics”.
In his trip, the U.S. Secretary of State Antony Blinken stated that “ If someone is coming along and saying I’m going to invest a lot of money in your country, but it’s a loan so, that means you have a debt and you’re going to have to pay it back someday and if that is too great and you can’t pay it back, then I’m going to own the asset in question”. While this was repeatedly denied by China and African economists and politicians, the west continues to wage the economic war against China and its development partners.
It was reported that Chinese Foreign Ministry Spokesperson Wang Wenbin retorted stating that “If we break down African Countries’ foreign debt, multilateral financial institutions and commercial creditors hold more than three quarters of the total, and so bear a greater responsibility for debt relief. Not a single African country had debt difficulties due to its cooperation with China.”.
Speaking on the subject of repayment of loans, Chinese Foreign Ministry Spokesperson Wang Wenbin is also reported to have stated that “When African Countries have economic problems, China is always ready to find proper solutions through friendly consultation. We never press countries having difficulties on debt repayment, not to mention asking them to sign any imparity clauses. In the meantime, China attaches high importance to debt suspension and alleviation in Africa. We have signed relief agreements or reached debt relief consensus with 16 countries”.
Economist Kelvin Chisanga who closely monitored the situation described the idea of a “Chinese Debt Trap” as “unrealistic”.
Even prominent western educational institutions such as the Johns Hopkins University has also researched and found that the notion of “Chinese Debt trap” to be unrealistic. A recent research from the Johns Hopkins University found that Chinese banks are willing to restructure the loans and that they have not seized a single asset from any country over debt.
In their study, the Johns Hopkins University researched $7.5billion of debt restructuring by Chinese banks in 10 African nations from 2000 to 2019. It was found that China had written off 94 interest-free loans amounting to over $3.4 billion.
And if we look at the situation here in the Maldives, the debt accumulated by the government of Maldives within the 5-year term under former President Abdulla Yameen’s Administration, stands at $1.56 billion while the debt owed to India into two years under President Ibrahim Mohamed Solih’s administration has hit over $2.4 billion. While details of some of the debt owed to India has been classified by the current administration, it is speculated that the total debt owed will be close to $2.6 billion.
From this publicly available data, it is evident that the debt owed by the Government of Maldives to India is far greater what is owed to China. And based on the fact that unlike India, there has been no instance of China forcing one of its development partners to repay amidst hardship or seize assets, China has no incentive to do things differently here in the Maldives.
If one were to impartially examine the data and facts surrounding Chinese loans and grants, it would be evident that the “Chinese Debt Trap” rhetoric is nothing more than a slogan produced by the west to undermine China’s growing influence over global politics.
Guest Opinion: U.S. should lift people’s living standards, not inflation
As the world’s largest economy, the United States must shoulder its responsibilities for world economic recovery, rather than push up inflation in developing countries.
by Xin Ping
BEIJING, June 7 (Xinhua) — The United States has tasted the bitter fruit of hyperinflation, which has stayed above 6 percent since the beginning of this year.
While attributable to the sharp rise in global energy, food and commodity prices caused by the Ukraine crisis, the hyperinflation is essentially a result of the unreasonable and irresponsible policies of the United States itself, such as massive bouts of quantitative easing, trade war against China, global supply chain disruptions, as well as escalating the Ukraine crisis and providing huge fiscal subsidies for the pandemic response at home.
When inflation became too high to bear, the United States chose not to address its root cause, but to switch to aggressive quantitative tightening. The Federal Reserve has raised interest rates twice this year, including a record hike of half a percentage point, the first of that size since 2000. The Federal Reserve also announced that it would start to unwind the balance sheet in June. All these measures have failed to curb inflation significantly, and the U.S. price surge remains in a historically high range.
Inflation does not stop at the water’s edge. As indicated by recent statistics, hyperinflation in the United States is spilling over fast, and Southeast Asia has taken the brunt, where inflation rates of many countries have climbed to new highs.
The rate in Laos reached 9.9 percent in April, when Indonesia witnessed a five-year high. Singapore saw its inflation at a 10-year high of 5.4 percent in March, coinciding with a 14-year CPI record, a roughly 5.7-percent rise from the previous year, in Thailand.
After a 4.9-percent year-on-year CPI hike in April, the Philippines suffered the worst inflation since December 2018. Judging by the current numbers, the situation in other Southeast Asian countries may seem relatively better. But experts have warned that Malaysia, Cambodia and Vietnam will see inflation hit new records in the near future. The big family of Southeast Asia is sharing the woes. According to FocusEconomics, an information service company, the regional inflation rate rose from 3 percent in February to 3.5 percent in March.
Southeast Asian countries are mostly developing countries where food consumption accounts for a relatively large portion of overall national expenditure. Therefore, in addition to increasing people’s living costs, high inflation may also lead to a higher risk of social unrest, as pointed out by Mohamed Faiz Nagutha, an ASEAN economist at Bank of America Securities.
The high inflation rates in Southeast Asian countries have naturally evoked unpleasant memories.
The Asian financial crisis in 1997 following the interest rate upsurge and dollar appreciation in the United States took its toll on the economic growth of Southeast Asian countries. Foreign exchange and stock markets plummeted like dominoes. Indonesia and Thailand suffered the most severe losses, with their GDP shrinking by 83.4 percent and 40 percent respectively within two years.
In the 2008 global financial crisis ignited by the U.S. subprime mortgage crisis, the financial systems of Southeast Asian countries were hit hard again. The Singapore Strait index fell by more than 45 percent. The Indonesian stock market had to be frozen indefinitely after a continuous sharp decline. More than 8 million overseas workers from the Philippines faced the threat of job loss and income reduction. And about 1 million workers in Thailand lived on the edge of unemployment.
Now the Federal Reserve’s aggressive interest rate hikes will again exert pressure on developing economies in multiple aspects. First of all, the rate hikes will further raise financing costs and trigger capital flight, both impacting the economic fundamentals of developing countries and complicating their post-COVID economic recovery. Secondly, the higher cost of the U.S. dollar may add a greater burden to debt-ridden countries, as underdeveloped nations tend to have a higher foreign debt ratio. Thirdly, in the foreign exchange market, the rising dollar index may create depreciation pressure on other currencies, thus triggering further inflation in other countries.
U.S. hyperinflation is seriously affecting the faltering world economy. Developing countries need to brace themselves for its long-term impact. Many of them, including Southeast Asian countries, have already felt the pinch of the surge in commodity prices, compounded first by the pandemic, and then by the U.S. interest rate hike and balance sheet reduction.
As the world’s largest economy, the United States must shoulder its responsibilities for world economic recovery, rather than push up inflation in developing countries.
Journalism: Drifting Dangerously
A picture speaks a thousand words. The image of rescuers retrieving Palestinian journalist Shireen Abu Akleh’s motionless body – perhaps lifeless too at that point of time – from the homicide site in occupied West Bank’s Jenin does point to an alarming truth. Journalism has become the most dangerous profession in the world today, with practitioners – labelled as “soft targets” – being widely considered as fair game. From gunmen, both State authorized and proscribed, to propagators of jingoistic politics, everybody seems to have developed a penchant for targeting journalists.
Who can forget Czech President Milos Zeman brandishing a replica of an AK-47, with “for journalists” inscribed in it, in a press conference? Early last year political protestors scratched “murder the media” on the door of the US Capitol – the seat of American democracy, and six months later, in July, members of Afghanistan’s Taliban militia brutally executed on-duty Pulitzer award-winning Indian photojournalist Danish Siddiqui, holed up in a Mosque to evade heavy gunfight during an assignment. Like Shireen, Danish too was in his press vest. Ironically, this was supposed to be the century of the media, and yet we ended up having a dangerous ecosystem where news gatherers are frequently turning into news themselves.
The UN reported fifty-five journalists and media professionals casualty last year, with nearly nine in ten killings since 2006 still remaining unresolved. “Far too many journalists paid the ultimate price to bring truth to light” lamented UNESCO Director-General Audrey Azoulay. She underscored the dire need of independent, factual information in a conflict-ridden world more than ever before.
Despite the UNESCO chief’s concern over systematic targeting of journalists, for the UN and western world in general, Shireen is just another number in the list of victims who perished while contributing to freedom of expression, promotion of democracy and ushering of peace in these turbulent times. Her sacrifice will be remembered, the calculated risk she took to disseminate truth will be applauded, but her death will remain a collateral casualty – mortality from occupational hazards to be precise. Israel’s aversion to a criminal investigation into Shireen’s death lay bare the duplicity of the West, paying lip service to the call for closure. As Danish’s family learnt the hard way, while fighting a legal battle in the International Criminal Court, justice for these crusaders will not come easy. After all, we live in a world where destructive rhetoric has taken a toll on people’s ability to emotionally relate to the pains of fellow humans.
I do not know if Shireen and Danish knew each other, but both flew on the wings of honest truth-telling to try and shape the narrative and discourage society from travelling along a dead-end path to nowhere. Their zeal for capturing the underlying messages of life was unparalleled, and they excelled in it too. Shireen covered the harsh realities of occupied life with meticulous dedication. She never deviated from revealing the human cost of occupation. Countless statistics, faceless people, heart wrenching stories of separation found place in Shireen’s reporting. Helpless parents struggling to ensure children’s treatment for want of special permit, individuals prevented from attending relatives’ funeral, mothers giving birth at check point, students missing examination and scholarship, patients losing the fight for life due to travel restrictions – innumerable stories of tragedy and personal losses from the embattled Palestinian territory continues to evoke strong emotion. Shireen documented such anguish without losing objectivity – never allowing her Palestinian identity to overshadow the journalistic instinct and etiquettes, which made her a public icon. A beacon to the rookie scribes back home, her narrative remained inextricably linked to that stuffy experience of growing up in a territory which is prison-like in ambience. Shireen’s brush with death during earlier assignments remains a testimony to the dangerous working conditions of Palestinian journalists and their grit as well.
The intense urge to be the voice of the voiceless, who are deliberately silenced and remain unheard, made journalists like Shireen take risk time and again while reporting on the Gaza wars, Intifada, enforced eviction from homes, indiscriminate killings of Palestinian youths, detention without charge and continuous expansion of Jewish settlements in Palestinian territory. In her death, Shireen eventually succeeded in bringing back the focus of the world to the necessity of a quicker political settlement to the Palestine issue so that no more talents are sacrificed in such a gruesome manner.
Danish, too, used his lens to create instant visual imprints on the human brain, concerning events happening around us that shake societal conscience, and in the process ruffled too many feathers. His pandemic photographs, the controversial Citizenship Act protest images from the heart of the Indian capital or that famous snap of frenzied mob beating a Muslim man ruthlessly during the 2020 Delhi riots, which shed light on the entrenched Islamophobia in society, enraged the Hindu right wing forces in India. Danish was on the hit list of majoritarian fanatics, but escaped fatality, only to fall into Taliban’s hands eventually.
Danish, like Shireen, might have been a victim of targeted killing, but both were consumed by hate, which blurs our vision and detaches us from sanity and rational thinking. Taliban guerrillas not only pumped bullets into Danish’s chest indiscriminately but also ran him over to mutilate the body further. Incidentally, methodical demonization of journalism through name calling has heightened risk factors and led to plummeting of trust in recent times. As journalists are frequently hunted down and murdered in cold blood for disseminating awkward facts, one wonders, what is the remedy to this ailment? To bring a perceptible change in the situation and reverse this dangerous trend, there is a need for greater awareness and stronger public defence of journalism’s true value for society. That can only happen when journalists do not shy away from telling their own stories of harassment to the world aggressively. Besides, judicial activism can help prosecute attacks against journalists.
We lose dozens of Shireen and Danish regularly. Is there an effective answer to such criminal assault on an essential pillar of democracy? Can the formation of an UN mandated high-powered investigation committee, to resolve those hundreds of cold cases of journalists killed for doing their job honestly, act as a deterrent? Three more reporters were killed around the world along with Shireen in the second week of May. It is an authoritarian world that we live in where even practicing democracies rely on subtle constitutional censorship to muzzle the press. Only legal retribution can send a stern message that the work and life of a journalist is priceless. The big question is, who will bell the cat to protect independent journalism and bring closure to the families of the dead?
‘Indo-Pacific Economic Framework’ not a blessing to Asia
Aurthor: Xin Ping
The U.S. has been trumpeting that its “Indo-Pacific Economic Framework” (IPEF) will bring prosperity to the region. But its sole purpose is to advance the “Indo-Pacific Strategy” and key interests of the U.S. instead of driving post-pandemic recovery, development and prosperity of the region. Asian countries need to brace themselves for the negative impact brought on by the framework which could be summed up as “four Ds.”
IPEF is created to encourage regional economies to “decouple” from the Chinese market by leading them to alternative supply chains, a step that Washington believes will help exclude China from the regional trading and supply systems.
This would essentially install a closed, exclusive and confrontational arrangement within this region designed with clear geopolitical and ideological intentions, which runs counter to the principles of multilateralism.The U.S. Trade Representative Katherine Tai has openly described the IPEF as an “arrangement independent of China.”
Given China’s economic size and influence in the region and the possible consequences of artificially splitting the trading system and cutting off supply chains, such an arrangement would not be conducive to the unity and regional economic integration of the Asia-Pacific.
There are speculations that as far as ASEAN countries are concerned, the U.S. is trying to recruit Indonesia, Malaysia, Singapore and Vietnam to join IPEF, while leaving out Cambodia, Laos, Myanmar and Brunei, which will undoubtedly affect the development of the ASEAN Community and undermine the unity of ASEAN.
The U.S. claims to support the centrality of ASEAN, yet IPEF apparently takes little heed of ASEAN’s preferred way of inclusive regional cooperation. A framework like this would only weaken and damage ASEAN’s centrality in the regional architecture.
IPEF’s proclaimed high standards in the fields of digital economy, labor, market supervision, environmental protection and anti-corruption are way higher than the standards set by domestic laws in some ASEAN countries and even by international conventions.
The Lane Xang EMU train arrives at the northern Laos’ border town of Boten, after passing by the China-Laos borderline, October 15, 2021. /Xinhua
In a sense, the U.S. could be forcing these countries to adopt certain domestic economic policies to serve U.S. interests. The exclusive and even punitive provisions contained in IPEF may contradict the commitments made in regional free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Putting forward IPEF is one of the 10 core tasks of the U.S. “Indo-Pacific Strategy.” The U.S. potentially aims to use IPEF to supplement its “Indo-Pacific Strategy” and establish a unilaterally dominant economic cooperation arrangement, rather than a true free trade agreement with mutual open market access and tariff exemption as desired by the regional countries.
It is, therefore, a deviation from the principles of openness, inclusiveness, equality and reciprocity that multilateral mechanisms and arrangements in the region have long followed.
The U.S. might hope to use IPEF to get regional allies and ASEAN countries on board to encircle China, but this is unlikely to materialize.
China and ASEAN are each other’s largest trading partners. Japan’s exports to China are roughly the same as those to the U.S., and imports twice as much from China as from the U.S. South Korea’s trade with the U.S. is only half of its trade with China. With RCEP having entered into effect early this year, the cooperation potential among regional countries will only be further unleashed.
The U.S. has repeatedly reneged on its words about Asia-Pacific economic and trade cooperation: the Obama administration had pushed forward the concept of the Trans-Pacific Partnership (TPP) before the Trump administration exited from it after taking office. Now the Biden administration has come up with IPEF. Inconsistency in Washington’s policy-making will only make regional countries question U.S. credibility and policy continuity.
As Mary Lafley, a senior researcher at the Peterson Institute for International Economics, pointed out, “Asian allies, still reeling from the unpredictable and destabilizing policies of the Trump administration, may be reluctant to invest much in new structures that can be as easily blown away as houses of straw.”
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