China is increasingly entangling the world in its debt trap. Laos has become the new victim of this dragon’s date trap diplomacy. In the event of billions of dollars of Chinese debt not being repaid, Laos has had to hand over its power grid to a Chinese state-run company. According to the report of Harvard Business Review, the Chinese government and its companies have given loans of more than 150 countries for $ 1.5 trillion, or 112 lakh 50 thousand crore rupees.
China making high speed rail track
China is working on building a high-speed rail corridor in neighboring Laos at a cost of $ 6 billion. The first train on this track is scheduled to arrive in the capital Vientiane on Lao National Day on December 2, 2021. On this date in 1975, this country came under Communist rule. Recent reports have shown that Laos is the new victim of China’s ambitious Plan Belt and Road Initiative.
Laos on the verge of defaulting
Initially, China gave a large loan to these countries, but when its relationship with the government there started deteriorating, it is now making a response to repay the loan. Because of this, Laos’ foreign exchange reserves have gone down by more than $ 1 billion compared to the annual outstanding debt payments. Laos is now facing the risk of being a loan defaulter. Reportedly, Laos has asked for some more deadlines from its largest lender, China.
Laos is China’s neighbor
Moody’s told junk state to Laos
In July, global rating agency Moody’s declared a junk state, further lowering Laos’s rating. According to Moody’s, Laos is currently struggling with a severe shortage of funds. In such a situation, if a country gave him a loan, then his chances of sinking are high.
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Laos took loan for these projects
Laos has borrowed billions of dollars from China for several hydro power and hopspeed rail projects on the Mekong River. This project is related to the Belt and Road Initiative of China. Which will connect China’s southern province of Yunnan with countries in Southeast Asia. The Export Import Bank of China has contributed nearly 60 percent of the total cost of the rail project. However, the remaining 40 per cent of the budget came from the joint venture of three Chinese state-owned companies. China owns 70 percent of the project, while Laos is given a 30 percent stake.
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China’s occupation of power grid of Laos
The government of Laos is going to give the bulk of the National Electric Power Grid to China state power company China Southern Power Grid Company in exchange for loans to China. This will give Laos some time to pay the Chinese. At the same time, Laos Energy Minister Khammani Intirath said that giving the Chinese company ownership in a government power company would benefit in experience, technology and human resources.
Pakistan learns from Sri Lanka, China takes land by giving loan
China playing ‘date-trap diplomacy’
China is currently playing ‘date-trap diplomacy’ with countries around the world. Through this, China gives loans to foreign countries in the name of first infrastructure development. When that country is not able to repay this debt then it starts capturing their resources. The latest example is Sri Lanka. Who had to give one of his port to Hambantota China in exchange for debt.