international observation: "debt trap theory" is a "discourse trap" of the united states and the west
2024-09-12
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this article is reproduced from [xinhuanet];
xinhua news agency, beijing, september 12 title: "debt trap theory" is a "discourse trap" of the united states and the west
xinhua news agency reporter zhao hui and li jiaxu
"it is very hypocritical for western countries led by the united states to advocate the so-called china's 'debt trap theory' in latin america and the caribbean." gerardo torres, deputy foreign minister of honduras, who attended the first china-latin america and the caribbean development forum in beijing a few days ago, told xinhua news agency that china-latin america financial cooperation is highly consistent with the development demands of latin american countries.
in recent years, as the china-latin america comprehensive cooperative partnership has continued to develop and deepen, the united states and the west have raised issues such as china's "economic colonization" and "debt trap" in an attempt to hinder normal cooperation between latin american countries and china.
the trick of "the thief crying thief"
torres pointed out that china's "debt trap theory" is a "discourse trap" of the west, and that the united states and other western countries are the real "nightmare" on the development path of latin american countries. "historically, the west has always been the creditor of latin america's huge debts. they use financial tools to impose their will on various countries, but the loans they provide are not dedicated to the development of people's livelihood," torres said.
in the 1980s, after years of quantitative easing, the united states suddenly tightened its monetary policy, rapidly pushing up the foreign debt risk of latin american countries, which were then in the stage of "import substitution industrialization" to develop domestic industrial products to replace manufactured goods imported from europe and the united states. first, mexico announced that it was unable to repay its foreign debts, and then more than a dozen latin american countries successively experienced serious debt crises, collectively falling into the "lost decade."
in 1989, the united states launched the "washington consensus" on the grounds of helping latin american countries cope with the debt crisis, requiring these countries to adopt a series of neoliberal policies, including relaxing state regulation, promoting the privatization of state-owned enterprises, and achieving trade and financial liberalization as prerequisites for multilateral financial institutions such as the international monetary fund and the world bank to issue loans.
after being forced to open their capital accounts prematurely, latin american countries’ ability to resist external systemic risks has been significantly weakened. under the impact of huge amounts of international hot money, latin america has fallen into a “vicious circle” of frequent crises, with the mexican financial crisis in 1994, the brazilian currency crisis in 1999, and the argentine debt crisis in 2001. in addition, aggressive privatization reforms have led to serious polarization in latin american society, further widening the gap between the rich and the poor.
in the view of pedro barros, a researcher at the brazilian institute of applied economics, the "china debt trap theory" peddled by the united states and western countries is a trick of "the thief crying catch thief".
"for decades, western countries have abused financial means to weaken the democracy, institutions and development potential of latin american and caribbean countries. now they are turning around and blaming china, thinking that china will follow their old path. however, they are wrong," barros analyzed. "the problem is not the financial instruments themselves, but the long-standing colonial thinking of the west."
really improve "hematopoietic ability"
barros pointed out that china has helped developing countries, including those in latin america and the caribbean, to improve their “blood-making capacity” and met these countries’ urgent development needs. this also reflects, to a certain extent, the inefficiency and dysfunction of traditional international financial institutions.
according to the china-latin america financial database jointly compiled by the inter-american dialogue research center, a us think tank, and boston university, between 2005 and 2023, loans provided by chinese development financial institutions to latin america and the caribbean were mainly used for infrastructure and other projects.
"chinese loans are crucial to the development of the region. take infrastructure as an example. more than a decade ago, ecuador faced systemic problems such as dependence on electricity imports. with china's support, more and more hydropower stations have been built, and the power shortage problem has been significantly improved," said barros.
gonzalo gutierrez, secretary general of the andean community, stressed that china's direct investment in latin america and the caribbean is also very welcome. "direct investment is of great significance. it can drive social employment, promote economic development, and form a good complementary relationship with loans."
according to a report released in july by the china academic network in latin america and the caribbean, from 2005 to 2023, china's infrastructure construction projects in the region have created a total of 778,000 jobs in the region.
in this regard, osvaldo rosales, consultant to the latin american and caribbean economic system, said that direct investment from china provides better development opportunities for latin american and caribbean countries and further promotes sustainable economic growth.
“patience capital” to unleash potential
yue yunxia, deputy director of the institute of latin american studies of the chinese academy of social sciences, said that china-latin america financial cooperation embodies the concept of south-south cooperation of mutual benefit, win-win, solidarity and cooperation. "western loans require latin american countries to carry out political, economic, social and other reforms in accordance with western paradigms to strengthen latin america's dependent status. on the contrary, china's loans to latin america are based on common development demands and do not attach any political conditions."
she stressed that although the total amount of china's loans to latin american and caribbean countries has increased significantly in the past two decades, it is far from posing a debt risk to the debtor countries, let alone triggering a debt crisis.
the latest data from the world bank shows that in 2022, bilateral debt with china accounted for 0.7% of the total debt in latin america and the caribbean (excluding high-income countries). as china's main debtor in the region, the proportions for ecuador, brazil and argentina were about 6.8%, 0.6% and 1.2% respectively.
the center for global development policy studies at boston university in the united states has also questioned china's so-called "debt diplomacy." a report released by the center in april 2023 said that china's foreign loans are a kind of "patient capital" that provides more long-term financial options for developing countries, including latin american and caribbean countries, helping these countries to improve their level of connectivity, promote trade flows, and attract foreign investment, thereby overcoming development bottlenecks and releasing sustainable growth potential.
"u.s. policymakers should stop using the term 'debt diplomacy' because it is conceptually inaccurate and lacks an empirical basis," the report warned.
