Chinese Diplomacy: Canary in the Loan Mine or Babble?

Read Time:5 Minute, 44 Second

By Sean Carver

If you have paid attention to Congress these days, you are aware that there is zero agreement across a wide range of topics: government funding, the debt limit, immigration, infrastructure, abortion, and climate change, to name just a few. In one area, however, there is universal consensus: China. Senator Jim Risch (R-ID), the Ranking Member on the Senate Foreign Relations Committee, views China as the greatest challenge this century for America. Similarly, Secretary of State Antony Blinken views China as the United States’ greatest geopolitical threat, and at the heart of this view lies China’s Belt and Road Initiative (BRI).

BRI is a Chinese Communist Party (CCP) strategy to connect China with the world, especially the developing world. In the United States, fear has grown as these nascent, burgeoning regions of the world join the initiative. One of its largest benefactors is Africa, where China is investing tremendously. The past decade, China has extended loans in excess of $140 billion. As the Sub-Saharan region becomes one of the most dynamic and innovative places in the world, advancements in sectors such as infrastructure development are projected to continue, if public and private investments do not taper off. With its Belt and Road Initiative, China has recognized Africa’s need for funding coincides and has committed $153 billion. This has led to consternation among China hawks in the U.S., who fear that China’s investments in infrastructure, construction of a military base in Djibouti, and increased trade are all cause for concern. Some of this fear may be an attempt to obfuscate the fact that the U.S. takes part in these same practices on the continent, so these concerns may be exaggerated. However, in two areas, liberal democracies and multilateral institutions should pressure the CCP to alter and improve its approach. These areas are hidden debt and surveillance.

Is China partaking in debt-trap diplomacy or is it a solid lender to the continent? Debt-trap diplomacy refers to a deliberate effort to over-lend to a country, in the hope that this will cause it to default. China then forces the debt-ridden country to align itself with Chinese geostrategic interests. Hawks also accuse China of strengthening its position in the region by forcing countries to default on their loans or agree to less desirable terms, like handing over strategic infrastructure. In 2020, Angola attempted to default on its loans; in response, China suggested that a commensurate compensation would be the Benguela railway or a port facility. The Party first identifies strategic infrastructure that supports its geopolitical interests in the countries in which it invests; it then pressures distressed countries into repayment by taking possession of these critical infrastructure.

Another reason for concern is the lack of transparency in the loan and infrastructure agreements between China and African nations. The need for vital infrastructure pigeonholes many leaders into agreeing to less-than-favorable terms and consigning the country to untenable levels of debt. However, Professor Brautigam, Director of the China Africa Research Initiative at SAIS (SAIS-CARI), believes that not all of these cases are examples of debt-trap diplomacy. Instead, she believes that China is unaware that it is overlending, and thus, the onus is on the governments that agree to these terms. Additionally, Professor Olubayi Olubayi, a Kenyan social entrepreneur, believes that for all African countries engaging with China, debt is the Africans’ issue to resolve.

“If we’re foolish, it will be a trap, but if we’re clever, it won’t be an issue,” said Professor Olubayi.

He acknowledges that China has provided the infrastructure for his country to develop, though some of this infrastructure allows authoritarian states opportunities to infringe on democracy and human rights.

China is providing authoritarian strongmen surveillance capabilities which allow African leaders to quash dissent. In Uganda, President Yoweri Museveni, who has ruled the country for 35 years, used Huawei’s facial recognition technology to suppress and arrest those in the country who attended an opposition political party rally. China also engages in its own surveillance of sovereign African states. In 2018, six years after its development, the African Union’s new headquarters in Addis Ababa was infiltrated by the Chinese, who had conveniently financed, developed, and constructed the building. Brautigaum stated that the insouciance shown by African leaders is a testament to their recognition that “the big players [U.S., China, Russia] are going to spy.” However, the African leaders’ acquiescence and indifference does not mean that they should condone these appalling actions. Butmany Africans remain unconcerned about Chinese surveillance and violation of their privacy.

“What are they going to do with my information?” said Tim Mutonyi, a teacher in Mbale, Uganda. His comment makes a stark contrast with those of Olubayi, who is more concerned by the actions of the Chinese, but admits that his countrymen remain unconcerned about their data being distributed or weaponized.

Currently, the U.S. approach is to warn countries about this issue rather than offering a long-term solution. An adequate response could be a public-private sector partnership involving technological conglomerates. This would act as a foil to China and thus prevent a monopoly on surveillance. One option is to use finance structuring similar to the U.S. International Development Finance Corporation (USDFC). Currently, USDFC focuses on underwriting to riskier small- and medium-sized enterprises, a vital source of development in the region. But a public-private partnership of telecommunication giants would be an alternative solution which would penetrate the market.

The Chinese have offered vital investments to the region. In the coming decades, African countries are expected to grow astronomically. They will need infrastructure, investments, security, and more to create safe, free, and prosperous societies – and China will play a large part in this development. The current and future issue of loans has been further exacerbated by COVID-19, and transparency is more vital than ever as many African states will struggle to repay their debts. Many still have not recovered, as their financial systems were eviscerated when lockdowns brought the world to a standstill. Thus, these states are in danger of being pressured into untenable loan agreements. The United States and multilateral institutions, like the IMF and World Bank, have a responsibility to provide alternative financial solutions and technologies to counteract some of the negative aspects of BRI. These alternatives would pressure the CCP to adjust its loans and surveillance practices to accommodate African governments and leaders with more equitable terms and conditions and ensure that every citizen on the continent will not live in a debt-strapped or digital-authoritarian society.

Citation(s):

Brautigam, D. (2021, October 12). Personal interview [Personal interview].

Mutonyi, T. (2021, October 20). Personal interview [Personal interview].

Olubayi, O. (2021, November 3). Personal interview [Personal interview].