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Why did CDS General Bipin Rawat warn Nepal about China’s manipulation?

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New Delhi: Chief of Defence Staff General Bipin Rawat has adviced Nepal to stay away from China, as Kathmandu needs to learn from Sri Lanka’s experience.

General Rawat said that China has entered into agreements with Sri Lanka and other countries of the region. China silently expands billions of dollars through loans to developing countries, after which it starts making strategic gains here.

In his keynote address at an online event organized by a Nepal think tank, General Rawat outlined the deep and broad ties between New Delhi and Kathmandu before saying that Nepal opened up to other countries, including China, based on its independent foreign policy Used to be.

“Nepal is free to act independently in international affairs, but vigilance and learning must be taken from Sri Lanka and other countries, which have also entered into agreements with other countries,” India’s top military official said. 

“Sri Lanka is just one example. Sri Lanka had to hand over the port of Hambantota in 2017 to China on a 99-year lease after struggling to pay the amount owed to Chinese companies. The Sri Lanka government’s financial condition deteriorated in borrowing from international markets to pay off China’s outstanding $ 3.3 billion debt,” General Rawat added.

“However, Sri Lanka is not the only country to suffer in this manner. A senior Indian government official said that China had loaned at least $ 31 billion to five South Asian countries, including Pakistan, Maldives, Bangladesh, Sri Lanka and Nepal. “These are reported figures, but the actual figure may be much higher.” 

No one really knows the actual figures, because Chinese lenders refuse to reveal the numbers to governments. Zambia is the first African country to default on its debt since the epidemic. According to a Guardian report, asset and fund managers wanted transparency on an estimated 3 billion loans from Chinese lenders who stopped them from giving details. Because a confidentiality treaty has been signed for this information.

It has become the first African country since the Zambia epidemic to default on payments. A study published in the Harvard Business Review in February this year estimated that about 50 percent of extended loans were not reported by Chinese institutions. It concluded that the Chinese state and its subsidiaries had lent $ 1.5 trillion in direct loans to more than 150 countries around the world.

The study noted that China surpasses traditional, official lenders such as the world’s largest official creditor, the World Bank, IMF, or all OECD creditor governments. Countries around the world have borrowed more than 6% of the world’s GDP from China as of 2017.

However, South Asia has Sri Lanka, Pakistan and Bangladesh, which have taken the largest loans from China. Bangladesh owes China $ 4.7 billion and has sought a $ 18 billion loan on a concessional and preferential basis to implement the mega projects. China promised $ 24 billion in loans a few years ago, but as of July 2019, only $ 981 was disbursed, according to the Diplomat website.

China has already lent $ 22 billion to Pakistan for its mega projects, including the economic corridor. This week, Islamabad has raised more than $ 1 billion to pay off the second installment of a $ 3 billion soft loan. With which he hopes to repay the third installment of Riyadh next month.

The State Bank of Pakistan underscores concerns about Chinese debt, stressing that the debt to CPEC is only $ 5.8 billion, which is only 5.3 percent of Pakistan’s total foreign debt.

The previous Abdullah Yameen regime of the Maldives pulled the Indian Ocean island chain into a debt trap. Now parliament speaker Mohammad Nasheed has announced that the Chinese debt bill is in the vicinity of $ 3.1 billion, including government-to-government loans, which are funds given to state enterprises and private sector loans guaranteed by the Maldives government.

Analysts said the Maldives could struggle to repay Chinese debt by 2022-23, noting that the $ 4.9 billion economy is struggling due to declining tourism revenues.

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