China’s Debt Trap Due

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Global Recap
November 08, 2023 • Read in: 7 minutes

Hi Global Recap readers,

Ever borrowed for a dream house or luxury car? Imagine the lender is the Chinese government. 😬 

That’s the reality for many cash-strapped countries today.

🌐 Around the world:

  • Israel: “indefinitely” staying in Gaza?

  • Israeli-American cop stabbed by a teen.

  • Italy looks to Albania.

  • EU seeks Elon Musk’s help.

  • China’s debt trap due.

Let’s get into today’s news.

🚧 Israel Occupying Gaza?

On Monday, PM Netanyahu said that Israel plans to indefinitely keep the “overall security responsibility” of Gaza after a month-long war with Hamas.

From what the US State Department said about this, it seems like this isn’t a “reoccupation” of Gaza.

“Our viewpoint is that Palestinians must be at the forefront of these decisions, and Gaza is Palestinian land and it will remain Palestinian land. And generally speaking, we do not support reoccupation of Gaza, and neither does Israel.”

Vedant Patel, Principal Deputy Spokesperson of the US Department of State

🗡️ Israeli-American Cop Stabbed

A 20-year-old woman who defended a kibbutz against Hamas’ attack last month was stabbed to death by a 16-year-old Palestinian in Jerusalem. She immigrated from the US to Israel and joined the border police in 2021. The attacker was later shot dead by the Israel Defense Forces (IDF).

IDF labeled the attacker as a “terrorist.”

🏝️ Italy’s Migrant Solution: Albania

Italy plans to build two detention centers in Albania to process migrants who try to reach its shores. Italian PM Meloni says it’s a “European agreement” and an “innovative solution.” Albania agrees, hoping to join the EU soon.

Human rights groups and opposition parties are outraged, calling it an “Italian Guantanamo.” The EU is skeptical, asking for more details.

🚀 EU Turns to SpaceX for Satellites

Europe’s own rocket program is stuck in the mud, so the European Commission has to fork over €180 million to Elon Musk’s SpaceX to launch its Galileo satellites.

This is awkward as the deal comes after the EU’s Internal Market Commissioner Thierry Breton forced Musk’s X to turn over data to prove that X is dealing with misinformation on the platform regarding Hamas - something Musk didn’t respond too well to.

🎬 YouTube Success

🫤 YouTube? What? How do I even start? I dunno what to talk about. No one’s watching my videos…

Now: You can join a community of creators, together with whom you will start getting answers to these pressing questions. Getting started on successfully growing your own community is a click away.

Best of all: Sign up now and the 5-day course with all the answers is yours to keep - for FREE.

China

China’s Debt Trap Due

🇨🇳 China’s Debt Diplomacy. The Asian giant has lent over a trillion dollars to developing countries, but now they want their money back.

💰 How Much They Owe. According to a new data analysis, low- and middle-income countries owe at least $1.1 trillion to China’s government and state-owned creditors. That’s more than half of the $1.34 trillion that China has lent to them since 2000.

🛣️ Belt and Road Timeline. China has been financing infrastructure projects across the globe for the past two decades, especially under its ambitious Belt and Road Initiative (BRI). China poured out loans to countries starting in 2013 to start off the Belt and Road Initiative with a 5-7-year grace period. The pandemic added two more grace years, which means it’s payback time now.

🌎 The World’s Biggest Creditor. But now, many borrowers are struggling to repay them due to:

  • the lingering effects of the pandemic,

  • high interest rates, and

  • currency devaluation.

💸 The Debt Trap. China’s lending spree has created a huge debt burden for many poor and vulnerable countries. According to AidData, a research lab at William & Mary, nearly 80% of China’s lending portfolio is supporting countries in financial distress.

  • Until 2008: No more than 10 countries were “financially distressed.”

  • By 2021: At least 57 were struggling.

👀 What China Is Doing. According to AidData, China has also been demanding cash collateral, imposing harsher penalties for late payments, and giving out emergency rescue loans which may worsen their situation.

🤔 What It Means. China’s debt diplomacy has raised concerns about its influence and intentions in the developing world.

  • Some critics accuse China of using debt as a tool to gain political and economic leverage, exploit natural resources, and undermine sovereignty.

  • Others argue that China provides much-needed financing and opportunities for cooperation and development.

Who’s right?