The United States is warning that the China’s New Silk Road could be a debt trap designed to ensnare countries that sign on to it. The warning came from a bipartisan group of congressmen who are concerned about China’s program, which it unveiled five years ago. Reporting on the development, Hospodářské noviny writes that the US president has yet to speak out on the matter, though he is currently stepping up pressure against China in what could erupt into a full-blown trade war. The concern is that China is lending billions of dollars to countries for them to create the transport infrastructure needed to facilitate trade with China.
The example being put forward is Pakistan, which is seeking debt relief from the International Monetary Fund because of its difficulty in paying back its debts to the Asian economic giant. “We write to express our deep concern over attempts made by the Government of Pakistan to seek a bailout deal with the International Monetary Fund to retrieve debts incurred from predatory Chinese infrastructure projects,” wrote the congressmen in a letter to the US Commerce Secretary Steve Mnuchin. The dilemma, however, is that failure to get Pakistan off the hook to China could put the country even more at its economic mercy. The US congressmen fear that the Chinese are using debt in this way to gain influence across the globe. Italy, the first G7 nation to sign on to the New Silk Road program and China is eager to expand the size of this club. HN spoke with Italy’s deputy economic minister Michele Geraci says China is a promising export market, but little more. “China isn’t a hopeful source for new investment in Europe,” he warned. “It concentrates on taking over companies, not on greenfield investments. Expectations that it could contribute meaningfully to the creation of job opportunities are unfounded.” Czech president Milos Zeman has been an active proponent of Chinese business interests in the country but he complained recently in a visit to the country that the billions of crowns in promised investments had not yet materialized.
Graphic: Council on Foreign Relations
