China's Exploitative Trade Relations

What is the issue?

Chinese trade investments and assistance in some Asian countries are taking shape as exploitative adventures, calling for a coordinated resistance.

How are China's actions becoming exploitative?

• SRI LANKA - Investments - China seems to have taken trade advantage in Sri Lanka by exploiting its economic vulnerabilities.
• Evidently, China has heavily financed some projects including the Hambantota port, power plant, airport, industrial park, sports complex, etc.
• Debt - The investments made have proved largely uneconomical.
• Most of the projects remain unutilised or under-utilised and hardly make any substantial returns.
• Given this, the investments and assistance could soon become part of Sri Lanka’s mounting official and unsustainable debt burden.
• Notably, Sri Lanka has been spending 90% of government revenues to service debts.
• Threat - Unable to repay its debts, Sri Lanka has been forced to convert Chinese investments into equity in Hambantota.
• This has given partial ownership of the port to the Chinese, posing threat for Sri Lanka's sovereignty.
• The projects are also leading to a plunder of natural resources by the Chinese companies.
• Notably, the World Bank has blacklisted some of these companies across the world because of their corrupt practices, including bribery.
• MYANMAR - China’s belt and road initiative in Myanmar is primarily concentrated on developing the Bay of Bengal port of Kyaukpyu.
• And connecting the port to neighbouring Yunnan province by oil and gas pipelines, and road and rail networks.
• But Myanmar is wary of over-dependence on China.
• This is because of China's environmentally damaging energy projects and its yearning for access to precious metals and stones.
• PAKISTAN - China’s ‘all- weather friend’ Pakistan is facing problems in implementing the China-Pakistan Economic Corridor (CPEC).
• Pakistan has some reservations with agreeing to the financial terms set by the Chinese.
• Notably, there is very little transfer of technology and know-how, and minimal local participation in Chinese construction projects.
• Evidently, China is only aiming at making use of its own surplus labour force and construction machinery and materials abroad.
• This is given the fact that its unprecedented domestic construction projects at home are completed.
• Pakistan is also concerned of the whereabouts of the resources to repay the debt that will accrue from the CPEC projects.
• Moreover, Pakistan will soon be unable to credibly claim sovereignty.
• This is because places like the Gwadar port are becoming more a Chinese-run military base, close to the strategic Straits of Hormuz.

How do other countries respond?

• India - By expressing its concerns over the Chinese presence, India has made Sri Lanka retain the operational control of Hambantota port.
• This is to ensure that Chinese submarines and warships do not freely berth in the port.
• Some pre-emptive action has also been taken to prevent the Chinese from developing Trincomalee as the next port of interest for its strategic ambitions.
• The Indian Oil Corporation has established a business presence in Sri Lanka.
• This is particularly for a progressive involvement in the use of Trincomalee for import and processing of petroleum products.
• Myanmar - Myanmar seeks the support of India, Japan, South Korea, the US, the EU and neighbouring ASEAN countries to resist the Chinese pressure.
• Indonesia - Indonesia has ensured that it responds cautiously to Chinese inducements and avoids getting closely drawn into a Chinese tactical web.
• In all, other countries should have a coordinated effort to strengthen the economic relations among themselves, to potentially tackle China's exploitative trade relations.

Source: Business Line