China Debt Trap

The term “China debt trap” generally refers to a situation where a country borrows large amounts of money from China for development projects or other purposes and then struggles to repay the debt. The concern is that the borrower country becomes increasingly indebted to China, ultimately leading to a loss of sovereignty or control over key assets or resources.

There have been several high-profile cases of this occurring in recent years, such as Sri Lanka’s Hambantota Port, which was handed over to China on a 99-year lease in 2017 after Sri Lanka struggled to repay its debts to Chinese lenders. Similarly, in 2017, Zambia’s state electricity company was taken over by China after it failed to repay a loan.

However, it is worth noting that not all cases of Chinese lending have resulted in debt traps. China has provided significant amounts of infrastructure funding and loans to many countries around the world, particularly in Africa and Asia, and some of these projects have been successful in boosting economic growth and development in those regions.

There is also debate over the extent to which China deliberately seeks to create debt traps for strategic or geopolitical reasons, or whether it is simply engaging in normal lending practices with the aim of promoting economic development and expanding its global influence.