Monday, February 26, 2018

African Debt and China: A Cautionary Tale from Sri Lanka

The Institute for Security Studies published on 21 February 2018 a commentary titled "Lessons from Sri Lanka on China's 'Debt-trap Diplomacy'" by Ronak Gopaldas, director at Signal Risk, a risk management company specializing in travel security.

The author pointed to Sri Lanka's borrowing binge from China to construct infrastructure that led to an untenable debt burden. As a result, Sri Lanka relinquished control to China of a major port built with Chinese financing. Given Africa's reliance on China as a source of funding, the author suggests there is concern that some African states will follow a similar pattern and mortgage their resources and strategic assets to China. At the same time, the author argues that savvy African countries can use their agency and insist on terms that allow China's involvement in Africa to grow their economies.

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