Europe

https://gga.org/china-vs-the-imf/

Experts say that the shift is largely due to China’s funding model, which provides multi-billion dollar credits at more flexible terms, even to countries otherwise restricted from big money by the IMF. “African countries seem to increasingly prefer loans from China mainly to avoid the very constricting neoliberal conditionality that goes with loans from the IMF,” says Chibuzo Nwoke, professor of international relations and vice chancellor of Oduduwa University in Ile-Ife, Nigeria. For years the IMF prevented low-income countries from taking up non-concessional, large-size commercial loans. And as other Western lenders often rely on the international financial organisation’s assessment of countries’ macroeconomic policies and readiness for reforms, African countries are increasingly looking elsewhere for finance.

The IMF’s required reforms included open markets, scrapping government subsidies, deregulating key sectors, privatisation and debt management. For the IMF, low-income countries must seek debt relief before they look for new loans, and countries must abide by a debt limit framework to benefit from debt relief.

Martin Uhomoibhi, president of the Pan African Institute for Global Affairs and Strategy in Abuja, says that the “so-called Washington Consensus or IMF ‘prescriptions’”, were perhaps the greatest factor that undermined Africa’s take-off in the early 1980s. In Nigeria, for example, “the harshly iniquitous IMF conditions undermined industrialisation projects, unrealistically devalued the national currency and halted growth”, he wrote in a 2016 analysis in Africa Policy Review. The Chinese lending model in Africa, on the other hand, allows low-income countries to access large-size loans for infrastructure if reimbursement can be guaranteed by lucrative commercial projects such as oil or mines, or export revenues. The infrastructure is then developed as long as the commercial project remains profitable. Experts call it a “mixed-funding” model.

https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/

https://web.archive.org/web/20260310202300/https://www.theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/

Even the extremely liberal "The Atlantic" seems to disagree with your mythology.

The Chinese ‘Debt Trap’ Is a Myth

The narrative wrongfully portrays both Beijing and the developing countries it deals with.

The notion of “debt-trap diplomacy” casts China as a conniving creditor and countries such as Sri Lanka as its credulous victims. On a closer look, however, the situation is far more complex. China’s march outward, like its domestic development, is probing and experimental, a learning process marked by frequent adjustment. After the construction of the port in Hambantota, for example, Chinese firms and banks learned that strongmen fall and that they’d better have strategies for dealing with political risk. They’re now developing these strategies, getting better at discerning business opportunities and withdrawing where they know they can’t win. Still, American leaders and thinkers from both sides of the aisle give speeches about China’s “modern-day colonialism.”

Over the past 20 years, Chinese firms have learned a lot about how to play in an international construction business that remains dominated by Europe: Whereas China has 27 firms among the top 100 global contractors, up from nine in 2000, Europe has 37, down from 41. The U.S. has seven, compared to 19 two decades ago.

Chinese firms are not the only companies to benefit from Chinese-financed projects. Perhaps no country was more alarmed by Hambantota than India, the regional giant that several times rebuffed Sri Lanka’s appeals for investment, aid, and equity partnerships. Yet an Indian-led business, Meghraj, joined the U.K.-based engineering firm Atkins Limited in an international consortium to write the long-term plan for Hambantota Port and for the development of a new business zone. The French firms Bolloré and CMA-CGM have partnered with China Merchants and China Harbor in port developments in Nigeria, Cameroon, and elsewhere.

The other side of the debt-trap myth involves debtor countries. Places such as Sri Lanka—or, for that matter, Kenya, Zambia, or Malaysia—are no stranger to geopolitical games. And they’re irked by American views that they’ve been so easily swindled. As one Malaysian politician remarked to us, speaking on condition of anonymity to discuss how Chinese finance featured in that country’s political drama, “Can’t the U.S. State Department tell the difference between campaign rhetoric that our opponents are slaves to China and actually being slaves to China?”

The events that led to a Chinese company’s acquisition of a majority stake in a Sri Lankan port reveal a great deal about how our world is changing. China and other countries are becoming more sophisticated in bargaining with one another. And it would be a shame if the U.S. fails to learn alongside them.