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  • On this episode of China Uncensored,

  • it's a trap!

  • HI, Welcome to China Uncensored.

  • I'm your host, Chris Chappell.

  • If you've noticed that China seems to be coming up

  • a lot more often in the news lately,

  • well, you would be right.

  • Chinese officials are eager to make China a superpower.

  • And they're doing it with the help of

  • an ancient Chinese Communist Party secret:

  • Lots and lots of money.

  • Yes, money.

  • The key to a successful communist regime.

  • The Party has over the last few years lent

  • huge sums of money to cash-strapped countries,

  • and then leveraged that debt to get what it wants.

  • A lot of this is tied to a trillion dollar plan

  • to build infrastructure around the world

  • and then use it to create wealth,

  • mostly for Chinese companies,

  • move goods, mostly from China,

  • and gain influence,

  • mostly for the Chinese Communist Party.

  • This project is the Belt and Road Initiative.

  • Also known as One Belt, One Road.

  • Let's get together and feel alright.

  • Now it's nothing new for countries with money

  • to spare to help out their needy neighbors

  • by offering them a loan.

  • Plenty of countries do it,

  • including the US.

  • But the Chinese Communist Party does it,

  • as they like to put it, “with Chinese characteristics

  • This stands in stark contrast to China's approach,

  • which encourages dependency using opaque contracts,

  • predatory loan practices, and corrupt deals

  • that mire nations in debt and undercut their sovereignty,

  • denying them their long-term, self-sustaining growth.”

  • As you might guess, some of the countries

  • who have made these deals with China

  • aren't feeling so alright anymore.

  • On today's episode,

  • we'll look at five countries

  • gripped by the Chinese regime's debt trap.

  • Number 5: Sri Lanka

  • The first port of call is Sri Lanka.

  • In 2010, Sri Lanka got a 1.5 billion dollar Chinese loan

  • to build a giant port in the town of Hambantota.

  • Which would be great

  • except it has barely any shipping traffic.

  • Without traffic through the port,

  • Sri Lanka realized it couldn't pay back its debt to China.

  • So instead, it signed away the entire port with a 99-year lease.

  • The China Merchants Port Holdings

  • got a 70% controlling stake Hambantota port.

  • With this agreement, we have started to pay back the loans,”

  • the Prime Minister of Sri Lanka told Parliament,

  • and talked about there being more money for economic development.

  • But critics say the cure might be worse than the disease.

  • Some see the deal as a precedent for countries that owe money

  • to China to accept deals that involve signing over of territory.

  • Territory that the Chinese regime might want to

  • eventually use for military purposes.

  • There is concern that the Chinese will transform

  • its 99-year lease of the Sri Lankan port of Hambantota

  • into another naval base,

  • the exact 'debt-trap' method the Chinese used in Djibouti.”

  • And a Chinese naval base in Hambantota

  • would be uncomfortably close to India.

  • Which might be one reason India might be considering

  • a deal with Sri Lanka to run what's been called

  • the emptiest airport in the world.

  • Sure, there may not be much air traffic,

  • in fact, there is currently no air traffic at all,

  • but it is pretty close to the now-Chinese port.

  • That airport, by the way,

  • was also built with the help of huge loans from China.

  • Speaking of uncomfortably close to India...

  • Number 4: Pakistan

  • With an overall lending pipeline of over 40 billion dollars

  • for the China-Pakistan Economic Corridor, or CPEC,

  • which is a big part of the Belt and Road,

  • Pakistan already owes China more than 6 billion dollars.

  • That kind of debt gives China some leverage.

  • First, China took control of

  • the strategic deep-sea port of Gwadar

  • and will get to call the shots for 40 years thanks to a lease.

  • And now, the Chinese military is building a joint naval

  • and air force base for Chinese troops.

  • And it's just a short distance up the coast from Gwadar.

  • According to this report,

  • Pakistan not only owes a ton of money to China,

  • but it's paying high interest rates on those loans as well

  • with some loans as high as 5%.

  • In other cases, Chinese investors were promised

  • crazy high returns on these infrastructure projects

  • like 34 percent each year,

  • guaranteed by Pakistan's government for 30 years.

  • But there are signs that Pakistan isn't all that comfortable

  • being so heavily indebted to China.

  • Back in November,

  • Pakistan announced it would not seek Chinese funding

  • for a new large-scale development.

  • They said China's conditions for financing the long-delayed

  • $14 billion Diamer-Basha dam on the Indus River

  • were not doable and against our interest

  • Pakistan is also heading toward a debt crisis.

  • That means they might have to get bailed out

  • by the International Monetary Fund.

  • Which would not only be embarrassing for Pakistan and China,

  • but also would probably limit future Chinese investment.

  • Plus, after a recent election,

  • it's not clear how the new prime minister

  • is going to treat these ongoing deals with China.

  • Has Pakistan learned its lesson after being forced

  • to let China open a military base on its soil?

  • Who knows?

  • But certainly it's not enough of a lesson to stop...

  • Number 3: Montenegro

  • What's Montenegro?

  • It's one of those Eastern European countries

  • that's approximately the size of Yankee Stadium,

  • and is located here.

  • No wait, it's here.

  • It's also the only country in Europe without a highway.

  • That's not a joke.

  • But then the Chinese Communist Party

  • offered to help Montenegro build one.

  • The Montenegro government callsthe construction of the century

  • and a pathway to the modern world.”

  • It would be 100-mile highway with massive bridges

  • that cut through difficult mountains and valleys.

  • But Montenegro only has 630,000 people.

  • Which is fewer people than my small neighborhood in Queens.

  • So you might wonder why it has spent

  • 950 million dollars on a highway.

  • Especially since no one even knows where Montenegro is,

  • so are they really trying to get there on a highway?

  • There were two feasibility studies done in 2006 and 2012.

  • Both of them suggested that their proposed highway

  • would not have enough traffic to justify the cost.

  • But fortunately,

  • the Chinese Communist Party was there to help with that.

  • So construction has begun.

  • And surprise!

  • China got a pretty sweet deal.

  • 70 percent of the workers building the highway are from China,

  • and in case of any legal dispute,

  • an arbitration court in China has jurisdiction.

  • And we all know the Chinese justice system

  • is a model of fairness and rule of law, right?

  • A European Union official,

  • who asked to remain anonymous,

  • is a little less enthusiastic,

  • saying that Montenegro has run out of money.

  • They have strangled themselves.

  • And for the time being this is a highway to nowhere,” the official says.

  • Hmmm.

  • Highway to the Nowhere Zone doesn't sound as cool, does it?

  • What's worse, the road is only partly done.

  • They need another 1.2 billion dollars to finish it,

  • which the International Monetary Fund

  • says Montenegro can't afford to borrow.

  • With a debt to GDP ratio expected to hit 80% soon,

  • Montenegro's government has already had to raise taxes,

  • freeze public sector wages and cut social spending.

  • But Montenegro's Prime Minister has vowed

  • to finish the highwayat any cost

  • and promisesto deepen cooperation with China in other areas,

  • including hydropower and tourism.”

  • And that's exactly the kind of commitment

  • Chinese officials want.

  • Number 2: The Maldives!

  • Ah, the Maldives!

  • A tropical paradise located in...ok,

  • I had to look this one up, too.

  • It's here, in the Indian Ocean.

  • Gorgeous weather,

  • secluded beaches,

  • and what's this?

  • The China Maldives Friendship Bridge??

  • It's a 225 million dollar bridge that's funded

  • mainly through a grant and a loan from,

  • you guessed it, China.

  • The loan is the tough part.

  • With the funding of this bridge,

  • it puts the Maldives' debt to GDP ratio at nearly 100%—

  • meaning it owes as much in debt as its entire economy

  • generates in one year.

  • Sounds kind of like my student loan debt.

  • And take it from me,

  • that's not healthy.

  • But the Maldives is already dealing with

  • being swallowed up by rising sea levels,

  • and could be underwater in 60 years.

  • So really, does it matter if they're also

  • financially underwater from debt to China?

  • They're like, “Yeah, China,

  • why don't you try to collect your money from the ocean.”

  • Well, the problem of course,

  • is that before the Maldives becomes the next Atlantis,

  • the Chinese Communist Party could still force them to, say,

  • give up land for a Chinese military base,

  • which would just so happen to be in

  • an excellent strategic location near India.

  • But don't worry,

  • the Chinese Ambassador said in a recent speech

  • that Chinese investments in the Maldives are totally normal,

  • and thatThe allegations of 'land grabbing'

  • and 'debt trap' are totally groundless.”

  • Not that anyone asked, but...

  • it's better to get out ahead of these things.

  • Sometimes.

  • And that brings us to...

  • Number 1: Djibouti.

  • If you don't know where Djibouti is,

  • you've got a problem.

  • Because I've talked about it so many times on China Uncensored.

  • The African country of Djibouti is home to China's first,

  • but definitely not last, overseas military base.

  • Also, it's just a few miles down the road

  • from an American military base.

  • Giving rise to a shocking incident where Chinese personnel

  • allegedly pointed lasers at US pilots.

  • Well the joke's on them,

  • because the US military had already stopped using cats as pilots.

  • But childish laser games are the least of America's worries.

  • The Washington Post recently asked,

  • Can the Trump administration stop China

  • from taking over a key African port?”

  • Why would it want to?

  • Well, ever since the government of Djibouti

  • seized control of the Doraleh Container Terminal

  • from a Dubai-based company in February,

  • there have been reports that it plans to strike a deal

  • with a Chinese-state-controlled firm to run the facility.

  • And it just so happens that the port is the main access point

  • for American, French, Italian and Japanese bases in Djibouti,

  • and is critical to launching anti-terrorism missions

  • in parts of Africa and the Middle East.

  • The U.S. military is now warning

  • that if a Chinese-state-run company gains control of the port,

  • “U.S. national security interests will be put at risk.”

  • Meanwhile, officials warn that Djibouti has been growing closer to,

  • and is increasingly indebted to,

  • the Chinese government.

  • If only someone could shine a light on this problem.

  • Some kind of bright, single-color beam of light.

  • So what do you think of the debt traps some countries have fallen into with China?

  • Leave your comments below.

  • And before we go, it's time to answer a question

  • from a fan who supports China Uncensored

  • on the crowd funding website Patreon.

  • David Michael White Chris,

  • which flavor of tea would you

  • highly recommend for others to taste?

  • This is probably the most important question

  • I've ever answered on the show.