The Chinese debt trap: Why General Rawat cautioned Nepal
New Delhi, Dec 20: In a recent dress, Chief of Defence Staff, General Bipin Rawat advised Nepal against signing off on loans from countries in the region and asked it to learn from Sri Lanka's experience.
Nepal must learn from countries like Sri Lanka and stay vigilant in its dealings with China, General Bipin Rawat said.
General Rawat was addressing the annual dialogue between the Centre for Land Warfare Studies in New Delhi and the Nepal Institute for International Cooperation and Engagement.
Here, I would like to stress that India's goodwill comes with no strings attached. Nepal is free to exercise its choices in international affairs, but it should stay vigilant and learn from some cases of Sri Lanka and other nations who have signed agreements with other countries in the region, he said.
The unique India-Nepal ties have been built over centuries. In the present age, Nepal is also opening up to other nations, including China based on its independent foreign policy, he said.
The General's statement were an obvious reference to to the way China has entrapped several nations in debt through infrastructure projects. India has concerns that China through its infrastructure projects are making inroads into Nepal in a bid to work against New Delhi's interests in the country.
Nearly 50 per cent of the loans extended by China were not reported. The Chinese state and its subsidiaries have lent around 1.5 trillion USD in direct loans to more than 150 countries, according to the Harvard Business Review. China is the world's largest official creditor and surpassed official lenders such as the World Bank, IMF or all OCED creditor governments combined, the study noted.
In South Asia, it is Pakistan and Bangladesh which have taken the highest loans from China. While Bangladesh owns USD 4.7 billion, in the case of the Pakistan the loan is USD 22 billion.
Maldives on the other hand is worried about the debt trap. The Chinese debt bill was around USD 3.1 billion including government to government loans. The country may struggle to repay the loan by 2022-23 given how the economy has been strugling.