Senate President Pro Tempore Ralph Recto warned the national government against alleged China’s debt trap amid the COVID-19 pandemic, noting the need to secure the country’s sovereignty over the West Philippine Sea.
“I think we should not be incurring more debts from China,” Recto said in an interview on CNN Philippines.
The senator filed a Senate resolution urging the government to limit its borrowing from China.
“Because of the pandemic, in the Philippines, our revenues have gone down, we will be borrowing more and to finance the many Build, Build, Build projects that we will be undertaking, hopefully we should not be borrowing these bilaterally from China,” Recto said.
“China already has a track record in lending out money to many countries, and we’ve seen what has happened to many countries. There is what you call a debt trap as well,” he added.
According to the Harvard Business Review, “In total, the Chinese state and its subsidiaries have lent about $1.5 trillion in direct loans and trade credits to more than 150 countries around the globe. This has turned China into the world’s largest official creditor — surpassing traditional, official lenders such as the World Bank, the IMF, or all OECD creditor governments combined.”
China’s debt trap
China’s overseas development policy has been called debt trap diplomacy because once indebted economies fail to service their loans, they are said to be pressured to support China’s geostrategic interests.