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Tales spun by Western corporate media and politicians about China devastating economies in Global South by luring them into debt traps have increasingly worn thin and become threadbare. The latest episode to debunk such false narrative is China giving a fresh loan of $5 billion to Venezuela on President Maduro’s visit to Beijing last week.
The loan is a timely lifeline to Caracas, which has experienced hyperinflation over the last two years as a result of falling oil prices and America’s economic sanctions and sabotage against the Maduro government. Inflation rate in Venezuela smashed past 46,000% from January to April, with IMF forecasting an eye-popping 1 million % by year-end! The dire situation is similar to the hyperinflation in Zimbabwe in the first decade of the new millennium and Germany during the 5 years immediately following the end of the First World War.
According to press reports, the grace period for repayment for some of China’s $19 billion loans to Venezuela expired in April 2018. Instead of declaring loan defaults and demanding immediate repayment, as IMF and western banks are wont to do, China has agreed to lend another $5 billion to Venezuela.
China also helped its “Iron Brother” Pakistan last month by providing a $2 billion loan to avert Islamabad’s balance of payment crisis. In 2016, Beijing came to the rescue of Egypt by lending $1 billion to its central bank and entering into a currency swap agreement worth $2.7 billion. This financial package enabled Cairo to obtain $12 billion loan in three tranches from IMF.
Half of China’s foreign aid goes to Africa. China’s growing largesse to the Global South is fast catching up with America. With Trump taking a sharp knife to foreign aid, China is set to surpass the US as the largest donor by 2020. In addition, the Middle Kingdom has forgiven $3 billion debts owed by some African states over the past two decades. At the recent China-Africa Cooperation Forum in Beijing, President Xi Jinping announced that China would write off more soft loans extended to the most impoverished nations on the continent.
So, where are the debt traps sprung by China on unsuspecting developing countries in Africa, Latin America, Central Asia, South Asia and Southeast Asia? China is no Shakespearean Shylock, demanding to exact a pound of flesh on some hapless and helpless defaulters, or the Economic Hit Man from IMF.