A bipartisan group of senators is calling on the Trump administration to counter China’s economic expansion as the lawmakers fear that Beijing plans to leverage its foreign investments and lending for infrastructure projects into strategic military footholds.
The letter details how China uses its so-called debt-trap diplomacy to nurture dependence and extract strategic concessions from its borrowers. In the letter, the lawmakers call on the Cabinet secretaries to work with the International Monetary Fund — a lending institution that has lent money to countries facing significant debt to China — to offer alternatives to Chinese credit when developing countries are in need of infrastructure financing.
Perdue’s letter comes as international financial experts are warning that Pakistan will request an IMF loan which in turn could be used to repay China for a series of infrastructure projects.
Perdue and his colleagues hope that Washington’s outsized role in the IMF, as its largest financial contributor, can persuade it to only to offer loans that won’t be used to indirectly pay for Chinese projects.
Offering loans and entering into infrastructure partnerships across the globe is part of Beijing’s “Belt and Road Initiative” that seeks to connect China’s economy to new markets. Many foreign policy experts in Washington see the Belt and Road program as, in part, a military expansion project.
The fear of China extending its military reach was heightened last year when Sri Lanka, unable to repay more than $1 billion of Chinese debt, granted a Chinese state-run company a 99-year lease on Sri Lanka’s Hambantota port, which Beijing financed.
Lawmakers now fear that China may similarly gain influence over Pakistan’s Gwadar port on the Arabian Sea near the Pakistan-Iran border, as Islamabad looks for ways to repay Chinese loans.
“Gwadar and Hambantota are important footholds that if converted into naval bases will enable the [Chinese] Navy to maintain a permanent presence in the Indian Ocean,” the letter says.
That scenario would be a setback for the United States, which is seeking to block China’s military from establishing military bases around the Indian and Pacific Oceans.
In January, the Pentagon named China its top competitor in part because of Beijing’s island-building projects in the South China Sea. Some of those islands now house military outposts.
The Pentagon has said Chinese military entrenchment in the South China Sea could threaten the free movement of shipping through those waterways, which would be a blow to U.S. allies on China’s periphery and to global trade.
China’s military expansion into the Indian Ocean could yield similar problems for the United States, but on a larger scale.
“The goal for the [Belt and Road Initiative] is the creation of an economic world order ultimately dominated by China,” the letter says. “It is imperative that the United States counters China’s attempts to hold other countries financially hostage and force ransoms that further its geo-strategic goals.”
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