Parth Sharma asked: Is China's debt diplomacy a conscious effort to acquire strategic footprint in the Indian Ocean?

Sarabjeet Singh Parmar replies: China’s overtures to nations in the form of easy loans, some of which have turned into debt traps, can be viewed as a geo-economic strategy to achieve both economic and non-economic goals. This approach and methodology also helps in furthering its Belt and Road Initiative or BRI project, which can be called Xi Jinping’s “Prized Project”. Apart from the Indian Ocean, China now also has a foothold in Europe with reports of Chinese firms controlling around 10 per cent of the European port capacity, thus steadily increasing China’s global strategic footprint. The phase of debt collection is the third step after the first two phases of investment, and construction and operations. After the initial stretching of loan repayment time lines and other such sops, China will seek political or economic concessions, which strengthen its hold on the project or place, and may also necessitate some sort of Chinese presence. This presence could also be military.

Evan Feigenbaum from Carnegie has categorised China’s economic leverage into five types - passive, active, exclusionary, coercive, and latent. The first four categories aim at increasing China’s strategic footprint, and have been used effectively by China. The last type – latent – has been described as a coercive method, which China has not openly used as yet.

Captain Sarabjeet Singh Parmar was Research Fellow at IDSA. He is currently Senior Fellow at the National Maritime Foundation (NMF), New Delhi.

Posted on October 29, 2018