By Zenel Garcia
Despite anexhaustive bodyofempirical researchthat disproves the existence of Chinese ‘debt-trap’ diplomacy, itcontinues to have salienceamong US officials. While these officials may find value in mobilising the ‘debt-trap’ narrative tosupport alternativesto China’s Belt and Road Initiative (BRI), theyfail to recognisethat this narrative denies the agency of local actors.
The ‘debt-trap’ narrative projects US anxieties about its inability to develop acoherent trade policyand absolves it from innovative policymaking. Reliance on this narrative undermines US efforts to engage the Global South and exacerbates tensions in the China–US bilateral relationship.
A fundamental problem with the ‘debt-trap’ narrative is that it is patronising. It reflects a perspective that BRI host countries areill-informedand incapable of making sound decisions. More importantly, it elides local agency and context. Empirical research on the BRI and Chinese lending indicates that local actorsplay an important rolein shaping the BRI’s implementation, particularly in areas such as project selection, location, construction and operation. For example, in the case of the China–Pakistan Economic Corridor, Pakistani officials were theproponentsfor the routes that make up the corridor, its three phases and its sectoral focuses.
Local actors in host countries are often the ones that initiate requests for Chinese investment on projects that they prioritise. This was evident in the case of Sri Lanka’s much-maligned Hambantota Port, where the Rajapaksa administration specificallylobbied Chinato invest in the project.
The ‘debt-trap’ narrative also lacks salience in much of the Global South because there simply is no evidence of Chinarepossessing infrastructuredue to host countries’ inability to repay their loans. This includes the Hambantota Port, whose 99-year lease was exchanged for US$1.1 billion dollars that Sri Lanka used to pay debts to Western lenders and to boost its foreign reserves. China has regularly resorted torestructuring or forgivingBRI loans in addition tobecoming a lenderto countries in need of financial assistance and liquidity.
While there are legitimate concerns withChinese lending practicessuch as opacity and the possibility that it exacerbates the debt exposure of countries throughhidden debt, they do not constitute a ‘debt-trap’ as indicated by US officials. The narrative simply does not reflect the complex reality of these countries’ engagement with China.
The prominence of the ‘debt-trap’ narrative projects asense of anxietyover the United States’ position in the international system, particularly the erosion of its trade dominance. The reality is that there islittle appetiteacross party lines to pursue the kind of trade policies that would have a tangible effect on that trend, such as free trade agreements. This is why US-led initiatives like the Indo-Pacific Economic Framework for Prosperitylack tangible commitmentson market access and tariff reductions.
While the narrative is intended to discourage countries from participating in the BRI and accepting Chinese loans, it is increasingly evident to potential participants that US alternatives are either unavailable or inadequate to address local needs. When US officials mobilise the ‘debt-trap’ narrative while promoting alternatives to the BRI and Chinese lending, they fail to recognise that participant countries do not see these initiatives as competition to Chinese offerings. Rather, they often view them ascomplementary. In fact, they may seek toleverage competing offersto gain greater benefits for themselves.
These points expose how US reliance on this narrative acts as a crutch as well as a substitute to innovative policymaking. Misperceiving the nature of the BRI and Chinese lending undermines the possibility for cooperation in promoting economic development in the Global South — an area that is of mutual interest to the two powers.
It is time for US officials to drop the ‘debt-trap’ narrative. The reliance on this narrative actively harms US efforts to engage a significant cross-section of the Global South, a cohort that will play a growing role in shaping the future of the international system. Not only does this narrative not reflect the complex reality and experiences of participating countries, but it is also viewed as an effort by the US to force them topick sidesin a China–US strategic competition that they want no part of.
Projectedgapsin global infrastructure investments for the foreseeable future indicate that there is ample room for Beijing and Washington to pursue their respective economic interests. A better understanding of the nature of the BRI and Chinese lending reveals a higher degree oflocal agencyand complementarity than is assumed by US policymakers.
A recognition of this fact would allow for better policy formulation aimed at enabling local actors to shape Chinese activities in ways that mitigate legitimate concerns as well as serve as a foundation for greater cooperation in the economic development of the Global South.
