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BRI’s sly debt trap

Photo: AFPPremium
Photo: AFP

The Blue Dot Network formed by the US, Japan and Australia was intended to counter China’s BRI. But how effective this option will prove remains unclear. For now, BRI nations should tread cautiously.

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China’s Belt and Road Initiative (BRI) has been plunging nations into debt—while estimates of just how deep it is existed, inadequate scrutiny of Beijing’s designs had given it plausible deniability. A study by development-research lab AidData has now uncovered the depth of the problem. According to it, poor nations are saddled with “hidden debt" worth $385 billion. Typically, this is kept off their books, as their borrowings from China are already too high for their own good. Beijing has devised ingenious deals struck by Chinese businesses with local partners whose burden is often so opaque that it escapes notice. This is worrisome.

China has been investing in the infrastructure of more than 160 countries. Many of these, some of them in Africa, have weak finances and risk slipping into a debt trap. This, many suspect, is exactly Beijing’s plan, for the leverage it could then gain over their policies. Nations beholden to it would hardly be able to resist its geostrategic demands. The Blue Dot Network formed by the US, Japan and Australia was intended to counter China’s BRI. But how effective this option will prove remains unclear. For now, BRI nations should tread cautiously.

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