Should the U.S. Cancel all Debt to China?

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Should the U.S. Cancel all Debt to China?

Anders Corr shares an article published in the Epoch Times that sounds the alarm bell on the escalating debt owed to China.

One of the many threats to America from China runs through Sri Lanka. In that South Asian country, there are ongoing food riots. Sri Lanka owes so much to Beijing that it had to surrender one of its ports, plus 15,000 acres, for 99 years. Beijing doubtless seeks to turn the port, about 250 miles from its arch-rival India, into a naval base.

Other countries also owe dangerously unsustainable amounts of debt to Beijing. Djibouti, Laos, Zambia, and Kyrgyzstan owe at least 20 percent of their respective gross domestic products (GDPs) to China. Most emerging market countries like this are paying more and more of their national income as interest. Once they can’t pay, the Chinese Communist Party (CCP) springs the trap, demanding major concessions, including military bases that threaten the United States and its allies.

China already has a military base in Djibouti.

Beijing makes extraordinary profits on exports to the United States and Europe, then loans money to poorer countries around the world to finance infrastructure building by China’s own companies. The interest rates, repayment periods, and seniority of the debt (China gets paid first) are highly advantageous to Beijing because the CCP makes sure to grease the palms of leaders who cooperate with up to millions of dollars.

The usurious terms that result must be kept secret, or else they outrage voters. According to the Financial Times on June 1, China “proved to be needlessly secretive in its dealings, so sovereign debt is more opaque than it was, as well as more fractured.”

The seniority of China’s loans is a stab in the back of international institutions like the World Bank and International Monetary Fund, along with U.S. corporations that lent money to emerging market countries long before Beijing came along.

Key points include:

  • Sri Lanka’s crisis

  • The debt of emerging market countries

  • Opaque terms on foreign loans

 

Read the full article, Cancel All Debts to China, on