President Xi encourages Tonga to be active in China’s Belt and Road Initiative

China faces a growing backlash to the Belt and Road initiative (BRI) at home and abroad. Many Chinese complain of the Initiative as wasteful spending and countries abroad are concerned of increasing Chines influence. Whilst Beijing are touting the billions of dollars spending abroad, many Chinese are asking why that money is not being used to address domestic issues, such as health care, housing, and education. I am asking the question, what is China’s motivation? Why are they doing it? Data indicate that Chinese banks investing abroad are generally borrowing from US dollars internationally rather than drawing from their official foreign exchange reserves. Unlike Western lenders, China does not require its partners to meet stringent conditions related to corruption, human rights, or financial sustainability. This no stings approach to BRI has fueled corruption while allowing governments to burden their countries with unpayable debts. In recent election in Malaysia, Mahathir Mohamad defeated the incumbent PM Razak by openly campaigning against this Chines influence where Razak approved considerable loans from China which he and his party used to create an illusion of development whilst he and his associates plundered the state coffers.
Recent empirical studies have found that the BRI ambitious infrastructure Iniative elevates sovereign debt risks in eight countries involved in this massive Chinese Initiative. Of 68 countries identified as potential borrowers in the BRI, 23 were found to be already at a quite high risk of debt distress according to the study, among those countries is Sri Lanka, which made the news in December when it handed over control of Hambantota port –a facility built using Chinese loans to China Merchants Port Holdings port operator. Eight of these 23 countries would face difficulties in servicing their debt because of future financing relate to BRI projects. These countries include: Pakistan, Djibouti, the Maldives, Laos, Mongolia, Montenegro, Tajikistan and Kyrgyzstan.
Furthermore, More and more countries all over Asia and Africa have become warier of the BRI lending. In August, Kenya began cracking down on corruption related to the Chinese built railroad connecting Nairobi and Mombasa, arresting local officials who had used the project to fill their pockets. Other countries, such as Uganda and Zambia are starting to worry as well. In June, the Zambian think tank scholar Trevor Simumba warned that Zambi’a borrowing from China was rapidly becoming unsustainable and expressed concern about the sever lack of transparency over many key terms in the loans. These countries are beginning to worry not just about the costs of BRI projects such as Uganda’s recent highway expansion in which governments borrow Chinese money to pay Chines companies to build infrastructure at above market prices which I strongly disagree as one can see the terms are designed to benefit only China and not the borrower. We welcome Chinese money but should be in our own terms where Tongan companies with Tongan workers to do the work and boost our economy, and also our sustainability to pay back the loans must be seriously considered. This is a bad deal for any country, and Tonga should stick with the IMF and our friends the US, NZ, UK, Japan, and Australia as this is a Debt Trap. The future of our children and our sovereignty are at stake here, and the BRI is not the only solution.

Malo ‘Aupito,
Viliami Makasiale Naulu

Central Coast, Sydney, Australia