BRI and China’s Debt Trap Diplomacy: A Case Study of Sino-Tajik Relations
by Torunika Roy
In his speech at the APEC CEO summit in Papua New Guinea, President Xi Jinping clarified that the Belt and Road Initiative (BRI) is not an exploitative “trap” for other countries in this project. Rather, BRI is a “platform for cooperation” to promote harmony among countries (Infographic,2019). However, the record says that some countries do have fallen into a ‘debt-trap’, laid by China through her infrastructure-building projects. According to Harvard Business Review, countries like Djibouti, Tonga, Maldives, the Republic of Congo, Kyrgyzstan, Cambodia, Niger, Laos, Zambia, Samoa, Vanuatu, and Mongolia owe debt of at least 20% of their nominal GDP to China (Horn et al., 2020). As of now, China is trying to get the Pamir region from Tajikistan by debt-trapping it through BRI loans. This article would discuss China’s debt diplomacy and talk about China-Tajikistan relations, in which China is gradually debt-trapping Tajikistan to enhance its legitimacy and benefit on both political and economic terms.
BRI- A China-centric Trading Project
Belt and Road Initiative is a Chinese project that aims in connecting Asia with Africa and Europe through land and maritime networks. With the help of its six corridors, this project seeks to increase trade and improve regional integration (BRI, EBRD). BRI is also known as the ‘One Belt One Road’ and this concept has been derived from the Silk Road that was established 2000 years ago. The Silk Road was initiated during the Han Dynasty, and it connected China to Eurasia via the Mediterranean. According to EBRD, the BRI strives to improve infrastructure connectivity, coordinate policies, smoothen trade, connect people, and integrate the region financially. It has expanded to over 70 countries that account for about 65% of the world’s population and around 1/3rd of the World’s GDP. The World Bank has stated that BRI would boost trade, cut travel time, lift people out of poverty, and increase income. Nevertheless, the bank has also warned about the high debt risk that would be prevailing over the countries.
In 2013, BRI was unveiled as the One Belt and One Road Initiative at Kazakhstan by Chinese President Xi Jinping. The project promotes infrastructural development in countries, which is done by Chinese workers and firms. BRI has indeed brought prosperity and opportunities for countries that have partnered with China (such as building ports, railways, bridges, promising jobs, etc.). However, as every coin has two sides, BRI also comes with some special clauses that can be troublesome especially for economically weak countries. According to a study by ORF, “about 89% of BRI contracts are given to Chinese companies”, the study further elaborates the intentions of China, which is to flaunt her abilities and secure global dominancy through megaprojects (Wani, 2020). Chinese companies take loans from their state-owned banks and construct railways, ports, and highways in economic corridors.
Whereas BRI can set traps for other countries, it can bring opportunities for China. Firstly, BRI can give China control of strategic ports, resources, and land. Secondly, BRI helps China in securing partnership of weaker countries so that she can exploit them. Thirdly, it helps China in legitimizing the role of CCP at home. For instance, Chinese massive investments abroad bring profits back home. Especially when a country becomes unable of repaying the loan, it gives up a part of a land that gets added to the Chinese territory, thus further strengthening CCP’s motives. Fourthly, BRI partners back Chinese moves when China gets criticized globally. For instance, Kazakhstan supported China during the Xinjiang Crackdown. Lastly, BRI creates a ripple effect by allowing China to intervene in other countries’ socio-political issues that benefit China. China has successfully persuaded Tajikistan in banning Uighur separatist groups that could potentially harm China. Currently, China wants Tajikistan to cede the Pamir region because it used to be a Chinese territory under the Qing Empire (according to the Chinese).
China’s Debt Diplomacy
What is ‘Dept-trap Diplomacy’?
First coined by the famous geo-strategist Brahma Chellaney, the term debt-trap diplomacy was especially used to scrutinize Chinese intentions through ‘economic agreements’ with Central Asian countries (Rehorst & Kuijl, 2021). Also, according to Brad Glosserman (deputy-director of the Tokyo-based Center for Rule making strategies), debt-trap diplomacy allows China to use its funds and “overwhelm recipient nations, drown them in debt and then seize collateral” (Rehorst & Kuijl, 2021). Through this strategy, China predatorily uses its capital as loans or big projects and trap countries. The dept-trap diplomacy can also be seen in the Tajikistan-China relations, where the Tajik government ceded its land to China to pay debts.
According to a report by the Center for Global Development, 23 countries were found to be at a ‘quite high’ risk of debt distress under BRI. Among those 23 countries, eight can face difficulties in servicing the debt. Those eight countries include Pakistan, Djibouti, Pakistan, Maldives, Laos, Mongolia, Montenegro, Kyrgyzstan, and Tajikistan (Ming, 2018). Some countries have become anxious due to excessive debts and thus have finally cut down their BRI investments. In 2019, countries like Pakistan, Malaysia, Myanmar, Bangladesh, and Sierra Leone have ‘backed away’ from negotiated BRI agreements due to high project costs. The BRI negotiations usually take place between governments of concerned nations with below-market rates (Chandran, 2019). However, the projects are built mainly by Chinese companies and are paid with loans from government banks that can push some countries into a debt trap (Beware of BRI, 2019). With the help of BRI, China’s debt traps countries by “transferring technologies and providing aid for infrastructure development” (ORF). When countries are not able to pay the debt, they make different compromises such as ceding land or allowing more Chinese intervention.
Tajikistan is a landlocked country in Central Asia, which has borders with Afghanistan, Uzbekistan, Kyrgyzstan, and China. The country is surrounded by Pamir and Alay mountains and it hosts about 8.35 million people. Tajikistan is also the poorest country in Central Asia with nearly 1/3rd of people living below the poverty line (Kästle, Tajikistan).
Why is Tajikistan Important to China?
According to Rehorst & Kuijl’s, Tajikistan’s Catch-22: Foreign Investment and Sovereignty Risks (2021), there are two significant reasons that explain Tajikistan’s importance to China. Firstly, Tajikistan can become a crucial passageway to China as it has abundant natural resources, especially gas. Nonetheless, despite having plentiful resources, Tajikistan lacks routes for resource transportation, which would be provided by China. Secondly, both Tajikistan and China are members of the Shanghai Cooperation Organization, which motivates them to work together in combating the ‘three evils’ that are terrorism, separatism, and religious extremism (Rehorst & Kuijl, 2021). With this excuse, China has established a military base in Tajikistan’s Badakhshan province. Its motive is to monitor the Afghan Wakhan Corridor, which is strategically important to China. Many Chinese officials also perceive Tajikistan as a future hub for supporting the BRI project (Rehorst & Kuijl, 2021). Thus, Tajikistan is geo-strategically important to China to gain resources and to counter terrorism in the Central Asia.
Although BRI was announced in Kazakhstan, it was Tajikistan that became the first country to sign “a memorandum of understanding with Beijing on building the silk road economic belt” (Bardavid, 2018). According to CGTN, China has heavily invested in Tajikistan and many Tajik citizens have benefited from the project. The China Railway Construction Corporation built the Vakhdat-Yovon railway (a route connecting south and central areas) that has promoted faster connectivity. Many Tajiks have also stated that it is now easier for them to afford houses because of the infrastructure-related development under BRI. Moreover, China has also invested in Tajikistan’s thermal power that has eliminated power cuts, and has increased electricity supply by 60%.
Nevertheless, it is believed that Tajikistan has already fallen into the debt trap. According to ORF, China has become Tajikistan’s largest investor and its biggest debt-holder. To repay loans, Tajikistan has to make compromises. For example, in 2011, Tajikistan “was forced to cede 2,000 hectares of arable land to 1,500 Chinese farmers for rice cultivation” which has resulted in the incursion of Chinese civilians in Tajikistan. Not to mention but BRI agreements came up with a clause that “transferred greater control of local assets to China”. Moreover, displaying its dominancy over Tajikistan, China has established its troops near the Tajik city of Shaymak to monitor Afghanistan’s Wakhan Corridor to alleviate risks from Afghanistan-Tajikistan borders (terrorism, drugs, etc.). Besides, China worked with the Tajik government to install a facial recognition system in the country (Wani, 2020). This system registers people’s information that may be useful for China to mitigate Uighur related issues.
Tajikistan’s Way Out
Recently, in April 2021, top diplomats from Iran and Tajikistan, Major General Mohammad Baqeri (the Chief of staff of the Iranian Armed forces) and Colonel General Sherali Mirzo (Defense minister of Tajikistan, met and signed an agreement to establish a joint military defense committee (Goble, 2021). The formation of this committee is important to both countries. For Iran, this committee serves as a catalyst to increase its footprints in Tajikistan and promote ties with China. For Tajikistan, it is a tool to counterbalance Chinese influence on its territory. Chinese incursion in Tajikistan has threatened the Tajik sovereignty as it has been ceded away it’s lands to pays Chinese debts. Through this agreement with Iran, Tajikistan can gain the capacity to act more independently and prohibit further Chinese driven policies in Tajikistan (Goble, 2021). Moreover, the agreement can also be used to block Islamic extremist activities and counter terrorism coming from the southern part of the region.
America’s former President John Adams (1797-1801) famously stated that a country can be conquered and enslaved by sword and debt. China is definitely using the ‘debt-way’. At least 350 Chinese companies operate in Tajikistan that allows Chinese to move to Tajikistan. When more and more Chinese migrate to Tajikistan, it allows them to influence the Tajik government and make changes that suit China. The current situation in Tajikistan implies that China slowly wants to expand its influence over Tajikistan through its debt diplomacy. The Coronavirus pandemic is also going to exacerbate this inequality in China-Tajikistan relations. Tajikistan has already ceded land, mining rights, and even “allowed” Chinese troops to monitor to repay the loan. It is China, who is taking advantage of a poor country as a tool to strengthen its imperialist agenda. There is no doubt that BRI has provided jobs and other opportunities to many Tajiks. However, the losses due to BRI overwhelm the so-called benefits due to the Chinese project. Thus, other countries that are too dependent on China should learn from the case of Tajikistan and refrain from making such mistakes.
Torunika Roy is a post-graduate student of International Relations & Area Studies at School of International Studies, Jawaharlal Nehru University, New Delhi.