Author: Mintu Barua
During the COVID-19 pandemic, China has been extending its financial muscle in the BRI countries. Using the opportunity of the COVID-19 pandemic, China has provided a long-term lowinterest loan of US$500 million to Sri Lanka so that Sri Lanka can fight against COVID-19. Thus, China is using the crisis of the COVID-19 pandemic as an instrument to advance its strategic interests. It is widely known that Sri Lanka is the most fateful victim of China’s debt-trap strategy. Using Sri Lanka’s inability of repaying Chinese debt, in 2017, China took away Sri Lanka’s Hambantota port on 99 years lease. There is no doubt that these types of incidents are likely to increase in the post-pandemic period, but in a new form. The low-interest COVID loan is the newest tentacle of China’s debt-trap strategy. Indeed, China can provide enormous loans (which can be too big to repay especially after the devastating impact of COVID-19 on the global economy) to many of the BRI countries to overcome the crisis of the COVID-19 pandemic, which can significantly help China to achieve its strategic goals.
Significantly, the China-led international financial institution, the Asian Infrastructure Investment Bank (AIIB), has been playing a leading role in this debt-trap strategy. The AIIB announced to provide $10 billion to fight against the COVID-19 pandemic. Thus, in the name of fighting against the COVID-19 pandemic, China is portraying the AIIB as a likely alternative to the US-led international financial institutions, like International Monetary Fund (IMF) and World Bank, which are presently too weak to provide financial assistance to the COVID affected nations. One may observe that the AIIB may pose tough challenges to the western financial institutions, like World Bank and IMF, and the existing global economic governance. The World War II led to the rise of Bretton Woods institutions; likewise, the COVID-19 pandemic can be responsible for the rise of the AIIB.
After the outbreak of the COVID-19 pandemic, the U.S. has somewhat lost its control over the global health governance led by the World Health Organisation (WHO), and surprisingly, now the WHO is now to some extent controlled by China. As a result, under the Trump administration, the U.S. had withdrawn its membership in the WHO. Now the Biden administration is trying to restore the international position of the US. However, using its massive economic power, China has been gradually controlling various international institutions, such as the WHO. All these trends suggest that China is likely to create more problems for the existing global order.