Thursday, April 23, 2020

China, Djibouti, Sri Lanka and Debt Equity Swaps

China Brief published on 13 April 2020 an article titled "Mind the Trap: What Basing Rights in Djibouti and Sri Lanka Reveal about the Limitations of Debt as a Tool of Chinese Military Expansion" by Scott Wingo, PhD candidate at the University of Pennsylvania.

The author looks at China's debt equity swap with Sri Lanka for a 99 year lease over the Hambantota Port and suggests it will not necessarily lead to guaranteed naval access by China. He describes China's position in Djibouti as not a "debt trap" but a voluntary exchange of bank credit for Chinese naval access.