State Department

Under Secretary of State, Keith Krach warns of a second pandemic — the rising wave of unsustainable debt owed to the Chinese Communist Party by developing nations.

Keith Krach: Developing nations are reeling from the shock of a China-born pandemic, but they’re also coming to terms with a second Chinese pandemic that can’t be cured by a vaccine. The rising wave of unsustainable debt owed to the Chinese Communist Party. In its lending, just like in its many other forms of multi-dimensional warcraft. The CCP wields its three-Cs doctrine of concealment, co-option and coercion. Just as the CCP concealment of the virus resulted in a pandemic, it conceals the predatory terms of its lending. And just as the CCP’s cooption of Hong Kong has eviscerated the freedoms of its citizens, it co-opts developing countries by seducing them with money, only to lay claim to their assets later. And just as the relentless coercion of the Uighur people has grown into the brutal internment camps of Xinjiang. It coerces its debt victims through mafia-like intimidation and retaliation. China demands collateral for its debt. And in some cases, this collateral includes the ultimate loanshark terms. Like, if a country can’t make their payments, China has the right to seize any asset and revenues other than historical artifacts and their military. This would force Sri Lanka to turn over its most strategically located port to China. In keeping with the CCP’s doctrine of non transparency, these terms require secrecy in the form of non-disclosure agreements. The Chinese government considers the details of its overseas lending program a state secret. And unlike the clean debt offered by the United States and other nations, China has utilized its debt-trap strategy in conjunction with its one belt, one road initiative to dominate the developing world and seize control over rare earth minerals, oil, natural gas, cotton, lumber and other natural resources. To make matters worse for these developing nations, Chinese loan documents routinely mandate specific Chinese contractors that include Huawei, ZTE, China Harbor Engineering and China Road and Bridge Corporation, and tax free imports of Chinese steel, glass, aluminum and other materials, which compounds China’s profits. But worst of all, they ship in Chinese labor. So these projects don’t get the benefit of employing or training the local population. In most cases, they pull this off through a combination of bribes and threats, which unfortunately, binds the receiving nations to the leadership in Beijing. For developing economies to rebuild in the wake of this pandemic, this carnage of China’s lack of clean debt has got to end. To promote clean loans, the United States calls on all Chinese creditor agencies to transparently implement the G20 Paris club debt service suspension initiative, waive nondisclosure clauses and refrain from using them in the future. The Chinese government’s nontransparent handling of this initial pandemic outbreak has put global health and economic security at risk. The world must prevent this unsustainable debt from making the problem even worse. We call on all citizens, companies and countries all around the world to join together in requiring clean financing and clean infrastructure that is free from CCP concealment, co-option and coercion.