For a very long time, most Western states – and financial institutions, such as the International Monetary Fund (IMF) – have framed China’s Belt and Road Initiative (BRI) as a massive “debt trap” that China is using to establish its geopolitical tentacles across the world. For Washington, China’s spread threatened its own unilateral hegemony that it has been maintaining since the end of the Second World War. Therefore, the US would frequently demand “transparency” and warn the BRI countries of the dangers associated with partnering with China. More recently, as a global economic crisis began to develop in the wake of the Russia-Ukraine/NATO military conflict, the West started to re-project China’s BRI as an underlying cause for all the problems that some countries – such as Sri Lanka – faced. This was despite the fact that Sri Lanka owed only 10 per cent of its foreign debt to China. But by pointing all fingers at China, the West (unsuccessfully) tried to build an image of China as a country that robs other countries’ resources. Many in the West demanded that China must restructure its debts and/or help its BRI partners in economic distress.
But new findings indicate that China has been, for a very long time, helping its partner countries. The Western propaganda notwithstanding, a new study conducted by researchers from the World Bank, Harvard Kennedy School, Kiel Institute for the World Economy and the US-based research lab AidData shows that between 2008 and 2021, China as an “International Lender of Last Resort”, spent US$240 billion bailing out 22 countries.
Three days ago, China decided to roll over US$2 billion to Pakistan to help the latter navigate a complex economic situation. This Chinese practice is neither new nor exclusive to Pakistan. More importantly, this practice is not different from what the IMF and other West-based private lenders have been doing for the past many decades. According to the said report,
“In terms of incidence, we identify 128 separate rescue lending operations. Most of these are rollovers, meaning loans renewed upon maturity and going to the same country … [the data] shows that some debtors, like Argentina, Mongolia or Pakistan, have received continuous balance of payments support from Chinese banks and the PBOC [People’s Bank of China]. These types of repeated bailouts by China are reminiscent of the “serial lending” practices by the IMF in recent decades …. and more broadly, the serial restructurings and bridge credits by private creditors prevalent during the 1980s debt crisis …”
This finding reveals many things that dismantle Western propaganda. First, China undertook 128 different rescue missions. It means that Western claims that China has countries under its “trap” are completely unfounded. Were these countries actually under the Chinese trap, the latter would have simply taken over their assets. Secondly, some countries have continuously received Chinese support. In other words, this support is not episodic or came as a result of Western pressure at points of crisis. Thirdly, the US claims that China is violating the so-called “rule-based” international order. The report shows that this is far from the case. In fact, the report shows that China is using the same playbook that the US-dominated IMF follows. How come China violates the international system? If anything, this report shows how China is actually reinforcing the same order. Therefore, the US propaganda about China being a “revisionist” power is nothing short of a hoax it is trying to sell to the world to discourage other countries from allying with China. Ultimately, the US wants to maintain its own hegemony. The crisis for the US is real, for China is doing exactly what the US has been doing for a very long time. To quote the report once again,
“Similarities between Chinese rescue lending and past US Treasury bailouts go beyond the terms of lending. The US Treasury, in conjunction with the US Export-Import Bank, has acted as an international crisis manager since the 1930s and extended bilateral bailouts through a variety of instruments, including its Exchange Stabilization Fund … Consistent with China’s contemporary approach, US bilateral bailouts systematically targeted countries with high level of outstanding debt to US banks and exporters, most importantly during the Latin American debt crises of the 1980s and 1990s. More recently, bailout loans during the Eurozone Sovereign Debt Crises were strongly driven by the large exposures that private banks in Northern Europe had vis-à-vis Southern European banks and sovereigns.”
While some western pundits were quick to point to the “fact” that China is bailing out countries that partnered with Beijing’s BRI, the report shows that the US has been doing the same, i.e. rescuing countries under Washington’s own debt, for decades. Again, China does not appear to be “violating” the so-called “rules-based” international order.
Secondly, it is wrong to project that China’s rescue missions are directed towards those countries – Argentina, Ecuador, Suriname and Venezuela in Latin America; Angola, Sudan, South Sudan, Tanzania and Kenya in Africa; Turkey, Oman and Egypt in the Middle East; and Pakistan, Sri Lanka, Mongolia and Laos in Asia – that borrow heavily from China. There is no denying that many of these countries – Sri Lanka, Pakistan, etc – also borrow from the IMF and other private lenders. For instance, out of Pakistan’s about US$125 billion-dollar external debts, Pakistan owes only about US$30 billion to China.
But when we read Western media reports and when we read statements by western political officials, the image we get of China is always negative. There is a simple intention behind this image: maligning China as an international player to undermine its rise and ability to dominate the world. The question, however, remains whether this propaganda will succeed. China’s recent diplomatic success in facilitating a “geopolitical bailout” between Saudi Arabia and Iran shows the strength that Beijing has acquired through its massive economic projects, mainly the BRI. From here, China only stands to grow further, with Western propaganda losing its appeal.
Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook.“
