Deutsche Welle Chinese Edition recently reported that Gerd Müller, the German Federal Minister of Economic Cooperation and Development, warned emerging countries about loans from China. He advised that borrowers should avoid developing any dependency on China provided loans. Such loans have had a lot of transparency issues regarding actual debt level and loan conditions. Gerd used Sri Lanka as an example. Sri Lanka lost control of the Port of Hambantota to China under a “rental” agreement, (in effect, a 99-year lease). This was the result of the high debt level Sri Lanka had with China. Gerd reemphasized his point during his recent visit to Africa, where he mentioned the high debt level of Zambia and its loans from China. One of the primary parties was the Zambia Power Supply Company (Zesco) that provided a guarantee. In the past few years, China invested a large amount money in African infrastructure. These investments were often China-backed loans, which were used to fund Chinese companies to deliver construction. Natural resources were often used to serve as the payment of the debt. In addition, these contracts often lacked transparency.
Source: Deutsche Welle Chinese Edition, January 16, 2019