On this episode of China Uncensored:
This African country now knows what it feels like
to get owned by the Chinese Communist Party!
Hi, Welcome to China Uncensored.
I’m your host, Chris Chappell.
Zambia is a landlocked country in southern Africa.
And it’s poised to be the next African country to fall prey
to the Chinese Communist Party’s predatory lending practices.
The news service Face 2 Face Africa gets straight to the point,
asking “Is Zambia Africa’s first casualty in China’s takeover
after defaulting on loan repayment?”
Well technically it’s not the first—
don’t forget about Djibouti—
but it could very well be the next.
And it’s all happening under the radar.
According to Africa Confidential,
Zambia can’t afford to pay back
its multibillion dollar loans to China,
and so there are secret talks going on
between Chinese and Zambian leaders
to hand over the country’s biggest energy producer.
The report says,
“The state electricity company ZESCO is already in talks
about a takeover by a Chinese company.”
ZESCO supplies electricity to about 80% of households in Zambia.
So signing away control of a strategic national asset is a big deal.
But it doesn’t end there.
The same report also revealed that Zambia is poised
to hand over the Lusaka International Airport to China.
That’s in addition to all the Zambian copper, nickel,
and cobalt mines that are already run by Chinese companies.
And Zambia’s state-owned TV and radio news channel ZNBC
is already 60% Chinese-owned.
Which might explain why you see lots of news reports lately
about Zambia-China friendship...
...but not so many reports about all those Chinese takeovers.
Of course, a Zambian government spokesperson
has gone into denial mode,
saying that “all stories relating
to the sale or takeover of public assets
such as ZNBC, KKIA and ZESCO by China are false.”
But investigative reporters from Africa Confidential say Zambia
is getting owned by the Chinese Communist Party—literally.
Africa Confidential also warned that the long-term outcome
could be effective Chinese ownership of the commanding heights
of the economy and potentially
the biggest loss of national sovereignty
since they gained independence in 1964.
Another term for this whole thing is simply “debt trap.”
“More of Africa finds itself in China’s debt.”
“China is saddling the partner countries with crippling debt.”
“Saddling Africa with unsustainable debt.”
And “debt trap” has become a buzzword that’s harder
to shake off than a hater in a Taylor Swift song.
Yes, my pop culture references are very current.
At the recent China-Africa summit in Beijing,
“A senior Chinese official denied...
that his country was engaging in ‘debt trap’ diplomacy.”
And even Chinese leader President Xi Jinping
jumped on the denial bandwagon.
He prefaced the announcement of 60 billion dollars
of new funding for Africa
with the so-called ‘five nots’ of predatory lending.
"(China) is determined to implement the 'five nots'—
to not interfere in countries in Africa
exploring a development path
which suits their own country’s situation,
to not interfere in the internal affairs of Africa,
to not impose (China’s) will on Africa,
to not attach any political strings when offering Africa support,
and to not seek political expediency
during investment and financing in Africa.”
Ok.
Firstly the “five nots”
is a really stupid name for a national policy.
Unless Xi Jinping means it in the elementary school sense.
“The five NOTs!”
Because they’re all sarcastic.
And secondly, go back to that opening shot of the China-Africa summit.
Why are most of the Africans sitting in the back?
Anyway, while Africa’s demand for Chinese cash is high,
not everybody’s buying into the theory of China’s good intentions.
A specialist in Chinese Studies at Britain’s University of Nottingham
says interference is an inevitable part and parcel of the cash.
“Whenever you engage economically or financially
with another country you do interfere in the political structure,
or the economic structure and the power structure,
so in that sense any kind of engagement
is a kind of disturbing the status quo.
But that said,
there will at some point be conflicts
in the Chinese-African relations.”
And there’s a typical formula for how these conflicts play out:
The Chinese Communist Party offers loans to needy governments.
Those governments become dependent on Chinese money.
Then, when they can’t pay back the loans,
Chinese companies take over key infrastructure.
That’s according to an investment advisor
and political analyst in Nairobi.
“We cannot be naive, at this point in time.
We’ve seen countries take on enormous amounts of debt.
We’ve seen hugely inflated infrastructure projects,
many of which are white elephants before the get go.
And you don’t have to look very far,
whether it’s Gwadar in Pakistan,
whether it’s Tonga,
whether it’s Sri Lanka, which gorged on Chinese credit
and then had to disgorge their port at Hambantota.”
In what was pretty much a textbook definition of a debt trap,
when Sri Lanka couldn’t afford its loan payments,
it had to hand over the port of Hambantota to China
on a 99-year lease.
And the Chinese regime might want to eventually
use that port for military purposes.
Not to say that’s happening,
but...it’s probably going to happen.
US senators aren’t buying the story
of China’s good intentions, either.
In a letter to the US Treasury and State Department,
a group of senators expressed their concern
over bailout requests to the International Monetary Fund
by countries who have accepted
predatory Chinese infrastructure financing.
They believe that China has figured out a clever hustle
by saddling countries with debt they can’t afford to repay,
and then getting the IMF to bail these countries out
with money that comes, in large measure,
from American tax dollars.
They say the goal for China’s infrastructure construction
and financing in other countries is “the creation of
an economic world order ultimately dominated by China”
and that this poses a national security threat to the United States.
I should note that this letter is signed by
both Republican and Democratic senators,
proving that the threat of the Chinese regime’s global domination
is something we can all be scared of.
In the letter, the senators ask how the US can educate
our African allies about the risks of Chinese predatory lending,
and how the US can provide an alternative to the Chinese debt trap.
And while those are both good questions,
for countries like Zambia,
which has already signed off on
at least 8 billion dollars of project financing from China,
it may be too late.
“Well I think in some cases it’s too late.
In some cases the dominos are falling.
In Zambia you’ve got a eurobond price at 70 cents on the dollar.
If you follow the markets
that’s telling you that basically Zambia’s bust.
It’s biggest lender is China,
so we’re going to watch this situation now in real time
unfold in front of our eyes.
And there are a number of situations
which are very very similar.”
So what do you think about China’s lending practices in Africa?
Leave your comments below.
And before we go, it’s time to answer a question
from a fan of China Uncensored who contributes to us
through the crowdfunding website Patreon.
james mckay asks:
“Is it possible that the CCP's Belt and Road Initiative
will encourage manufacturing production to move to countries
with a lower labor cost?”
Good question, James.
In a way, that’s already happening.
That is, cheap manufacturing is moving out of China
to even lower-cost countries, like Bangladesh.
And even with some high-end products,
we might see it start to happen.
Like how—in the midst of the trade war—
President Trump is encouraging Apple
to move production to the US.
Not that Apple will do something
just because Trump says so.
But moving production out of China
isn’t necessarily tied to the Belt and Road Initiative.
It’s mainly because labor costs in China
are going up for other reasons,
and multinational companies want to make stuff
to where it’s cheapest.
China’s Belt and Road Initiative
doesn’t exactly aim to reduce labor costs.
It mainly seeks to get cheap raw materials from poor countries,
then assemble those raw materials back in China,
and then sell those finished products
to other Belt and Road countries.
That’s the goal of the Belt and Road.
Also to create debt traps that other countries can fall into.
Thanks for your question, James.
And remember,
you too can have your question answered on China Uncensored
when you become a Patreon supporter.
Once again, I’m Chris Chappell.
See you next time.
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