The Emergence and Fallacy of “China’s Debt-trap Diplomacy” Narrative

The “China’s debt-trap diplomacy” narrative has been rapidly socialized and politicized by Western media and politicians with the advance of the Belt and Road Initiative, but the assertion cannot withstand scrutiny. In the long term, China needs to further its Belt and Road vision as part of its new round of opening-up to shape a globalization featuring shared development.

In recent years, China has gained fruitful achievements in investment and infrastructure construction cooperation with countries along the proposed Belt and Road routes. At the same time, the West has begun to attack the Belt and Road Initiative (BRI) with fallacies, of which “China’s debt-trap diplomacy” is a typical example. By putting the blame for the debt crisis of some developing countries on China, it tarnishes China’s international image and creates obstacles for the BRI. Therefore, it is particularly necessary to have a thorough understanding of the cause and effect of the “China’s debttrap diplomacy” narrative, to refute its erroneous nature and reveal the real root causes of the current debt crisis in many developing countries.

Socialization and Politicization of “China’s Debt-trap Diplomacy” Narrative

With the development of the BRI, claims of “China’s debt-trap diplomacy” have widely appeared in the West. Driven by the joint hype of Western media and politicians, it has been rapidly socialized1 and politicized.

Xu Shaomin is Director and Associate Research Fellow at the Institute of Public Policy, South China University of Technology; Li Jiang is Visiting Research Fellow at the Institute of Public Policy, South China University of Technology.

1 “Socialization” here refers to the process in which traditional media and social media interact rapidly and extensively in setting the agenda for each other’s coverage, so as to rapidly transform it from a “meme” to a “narrative,” and effectively eliminate and suppress any other alternative narrative through passing news back and forth from media to media, finally forming an overwhelmingly dominating “official” narrative. The socialization mode of this kind of topic can also have a profound impact on political discussions, election campaigns and government policies. See Adam Breuer and Alastair Iain Johnston, “Memes, Narratives and the Emergent Uschina Security Dilemma,” Cambridge Review of International Affairs, Vol.32, No.4, 2019, pp.432–435.

“Debt trap” originally refers to the consequences for a government, or an individual, of borrowing at an interest rate which exceeds the rate of growth of its income, causing its current expenditure on items other than debt servicing to be increasingly reduced.2 In the 1970s, Western scholar Cheryl Payer attacked the International Monetary Fund (IMF) for controlling the economic policies of many Third World countries through ever-increasing loans, which eventually led these nations to submit to the economic dictates of developed capitalist countries. Payer described this as a typical “debt trap.”3 From the late 1970s to the 1990s, discussions on the nature, causes, impacts and solutions of the Third World debt crisis emerged one after another. Sovereign debt was no longer just regarded as a technical and economic issue, but an issue of international political economy involving politics and power games.4 The newly popularized term “China’s debttrap diplomacy” is pointing fingers to China, accusing it of “deliberately” extending loans to developing countries with high debt risks. As a result, China would take the opportunity to acquire strategic assets or rights and interests should these countries not be able to repay, in order to achieve its strategic goals.

After the financial crisis in 2008, discussions about China’s “debt trap” gradually appeared. It became an apparent trend after China launched the BRI. After 2017, the discussion on China’s “debt trap” rose sharply, and even exceeded the discussion on “debt traps” not involving China (see Figure 1). This phenomenon is especially true of the discussion on “China’s debt-trap diplomacy.” Before 2017, there were only very few reports and comments on this term, but since then it has increased rapidly and has become a hot topic in the global community. In short, “China’s debt-trap diplomacy” has been widely socialized.