December 11, 2017

Debt-Trap Diplomacy: How China is recovering its loans made to developing countries

In a reminder of how Chinese loans are collateralized by strategically important physical assets, Sri Lanka today formally handed over the Hambantota port to China on a 99-year lease because it is simply not in a position to repay its onerous debt to Beijing.

Next is Pakistan?

Sri Lanka on Saturday formally handed over the control of the southern deep sea port of Hambantota to the Chinese-led companies that will run its operations, and received its first payment on the 99-year lease, the Colombo Gazette reported.

The China Merchants Port Holdings company owns 85% stake in the Hambantota International Port Group Ltd, which will now restructure the port for an estimated cost of $794 million (Rs 5,119 crore). The total deal is worth $1.1 billion (approximately Rs 6,500 crore) and will help Colombo repay the money it owes Beijing. The Sri Lanka Port Authority controls the rest of the stake in the company.


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