UK Car Lending

How Beijing’s billions buy out the Commonwealth

If recipient countries cannot afford to repay what are often high interest loans, China will simply seize the assets that were used as collateral.

In Sri Lanka, for example, when the government became unable to repay a loan it had taken out to build the Hambantota container port, it was forced to cede the port and 15,000 acres of land around Beijing on a 99- one year lease.

While the port is likely to remain in deficit, it gives China a strategic position in a critical shipping channel off the coast of a rival country, India.

Critics call it “debt trap diplomacy,” and Ms. Truss is well aware of the problem.

“Too many countries burden their balance sheets with unsustainable debt,” she said this week. “Reliable and honest sources of funding are needed. Britain and our allies will provide that. But China will provide more.

China calls it the Belt and Road Initiative (BRI), its somewhat cryptic name for the global infrastructure development strategy put in place by President Xi in 2013.

Sometimes referred to as the modern-day Silk Road, it includes investments in around 70 countries with roads, railways, ports, airports, power plants, hotels and other buildings among the panoply of real estate. taking shape.

The Belt refers to the economic belt from Central Asia to Europe, while the Route refers to the element of the Silk Road.

Simply put, Xi’s policy is to use China’s vast cash reserves to gobble up raw materials, form political alliances, and dominate global trade in the long run.

The challenge for the West

Commonwealth countries would much prefer to borrow from Britain or other Western countries, but they complain that the investment they need is simply not available from more natural allies.

Biyika Lawrence Songa, Member of the Ugandan Parliament, a member state that has received nearly £ 9 billion in Chinese investment, said: “Commonwealth countries including Uganda are looking to China instead of China. Great Britain or other countries, because it is easy to access Chinese money and it is easy for our businessmen to get Chinese visas if they want to go there to buy equipment, for example.

“On the other hand, loans from European or American countries are subject to many conditions and visas are more difficult to obtain. “

He says the UK and Europe “must meet the challenges that have driven Commonwealth countries to China. It is because of a lack of alternatives that this has happened ”.

Andreas Fulda, Chinese scholar and associate professor of social sciences at the University of Nottingham, adds: “In the case of Africa, the UK has looked away and paid insufficient attention to Africa, which has given China an opening that does not exist otherwise.

“If you don’t invest and if you don’t have a forward-looking foreign policy, other actors will fill the void.

“It is in the interests of the G7 to re-engage with these countries because otherwise China can use its economic weight to buy its place.”

The United States, Japan and Australia attempted to counter it with their own Blue Dot network in 2019, followed by the G7 Build Back Better World deal earlier this year, essentially a Western version of the BIS, but China is so far ahead that it might be too late for the West to catch up. Indeed, the West sucks on China’s liquidity reserves just as the poorest countries do.

Chinese investment in the UK since 2005 has stood at £ 98.6 billion, or around 0.03% of GDP, although the most relevant fact is the extent to which the West has been happy to s ‘lean on China for its manufacturing needs.

Almost all of us have cellphones, laptops, TVs, electric cars, toys, almost anything that was made in China, and western companies keep flocking there to build new ones. factories that provide cheap labor.

A report from the parliamentary affairs select committee earlier this year warned that Uyghur Muslims in Xinjiang, northwest China, were being used as “slave labor” in factories across the country. The report says companies that “directly or indirectly benefited from the exploitation of Uyghur workers” included Adidas, Amazon, Apple, Google, Jaguar, Land Rover, Nike, Samsung, Uniqlo, Victoria’s Secret and Zara.