Chinese debt trap diplomacy: reality or myth?

Abstract

ABSTRACT Debt-trap diplomacy (DTD) is seen as a relatively new Chinese policy tool connected to BRI. DTD builds on the approach that China intentionally excessively lends money to low-income indebted states that cannot later repay Chinese debt. The borrowing state thus relinquishes some of its strategic assets to decrease its debt burden towards China (debt-for-equity swap). DTD debate has been encompassed by particular criticism questioning the existence of such a strategy as DTD. Scholars questioning DTD existence suggest DTD is far more complicated than it is usually portrayed, meaning DTD should not be automatically taken as a predatory technique China strategically pursues. This study seeks to elucidate whether China uses DTD as an elaborated strategic tool or if it is a solely constructed narrative that does not have any empirical substantiation. Six countries – Sri Lanka, Maldives, Malaysia, Laos, Kenya, and Djibouti – were analysed.