China Is A Loan Shark, Not A Benevolent Donor

The developing world is getting to know China in a very new role. And that new role is as the world’s largest official debt collector,

- PRAKASH NANDA

Communist China has always been better in pursuing “chequebook-diplomacy” (offering countries cash or loans or development funds to switch allegiances and gain diplomatic leverage) than democratic Taiwan. Therefore, it was not surprising when on March 26 Honduras established diplomatic relations with China.

Taiwan is now left with only 13 small countries in the Caribbean, Latin America, and the Pacific (Oceania) that have diplomatic ties with it. However, if one considers the overall efficacy of the chequebook diplomacy in furthering a country's national interests, China has reasons to be cautious. Chequebook diplomacy is bouncing back in many a case. And as we will see a little later, this is happening in China's case too, though it is a great success story with regard to Taiwan.

When Taiwan, officially called the Republic of China (ROC) lost its membership of the United Nations in 1971, following the Sino-US reconciliation that paved the way for the communist China (People's Republic of China or the PRC) to enter the world body as part of "One China policy", there were still around 50 countries that continued to be with Taipei.

But that number has been dwindling, thanks systematically to China's aggressive chequebook diplomacy by offering countries cash or loans to switch allegiances. Honduras, the latest example, has admitted that it cut ties with Taiwan because it was “drowning” in debt and wanted the extra investment that China offered. China has excelled in doing this also in Oceania where it snatched countries from Taiwan’s magic.