Has Thailand fallen into China’s debt-trap diplomacy?
Belt and Road Initiative (BRI) is a scheme spearheaded by the Xi Jinping’s Chinese government in 2013 which the public widely believes that it will be a new geopolitical vehicle for China to becoming the world’s new preponderant superpower. The scheme comprises of a various ranges of infrastructure projects investment for example, high-speed railways (HSR), gas pipelines, deep seaports, industrial hubs, and airport facilities into developing countries with higher than $1 trillion budget plan.
China intends to spread out its influence into the countries like Myanmar, Cambodia, Sri Lanka, Pakistan, Cameroon, and Djibouti via using concessional loans with low interest rate from three leading Chinese banks; China Development Bank (CDB), EXIM Bank of China, and Asian Infrastructure Investment Bank (AIIB) to fund the infrastructure projects investment in those countries for its global connectivity program to link a supercontinent of Asia, Europe, and Africa into the biggest geopolitical heartland revolved around Beijing.
But the tricky part is that China will employ a plethora of approaches to prevent its counterparts from being able to repay their debt and consequently fall into a notable debt-trap diplomacy where those recipient countries have to cede some of their lands to China in a form of 99-year land lease as a tool for debt repayment. Sri Lanka’s land seizure of Hambantota port is a good example, stated by Ronak Gopaldas, for this predatory economic practice China uses towards its trading partners.
Encountering an opaque design of the investment contract that favors the Chinese-affiliated firms combining with a secretly corrupted bidding process and a rarely disclosed loan terms from the bilateral cooperation initiated by the Chinese government. It gives Chinese companies an easy-pass ticket to win contracts. It grants a limited range of transparency and pushes the recipient countries into a deadlock where China can extract an exploitation towards them. China also refuses to join the world’s major creditors’ association called the Paris Club in which they unanimously agree to control their lending rates, provide unambiguous information, and coordinate a sustainable debt relief program.
Building from the above conditions, it is simply not impossible for the recipient countries to be fallen into a debt-trap diplomacy and automatically ended up in an over-dependent relationship with China as a sole financier or major creditor to those particular regions.
“China engages in debt-trap diplomacy through the BRI, ensnaring developing countries with debt dependence and then translating that dependence into geopolitical influence”, said Paul Haenle.
This hegemonic geopolitical landscape is granting no benefit for the recipient countries in a longer term nor will provide the Xi Jinping’s so-called win-win cooperation. Because it might only be a unilateral victory gained by China when Xi Jinping can dominantly draw a connectivity line across the supercontinent via the BRI project and topple the United States’ supremacy in the region.
Those are the reasons why recently there seem to be some pushbacks from governments, such as Myanmar, Nepal, and Pakistan, that try to cancel and decelerate the progress of China’s BRI project in their countries (and propose for a re-negotiation in Malaysia’s case). It shows that many countries start to realize that the BRI launched by Xi Jinping is not just a development assistant project embracing for a better infrastructure in developing countries. But on the contrary, it is likely that China is rallying to gain influence in major strategic locations in those recipient countries along the path BRI has been drawing to in the recent years.
Thailand is one of the developing countries where its strategic location, as the only gate way to Malaysia via land transport, appears to be attractive to Chinese investment and the BRI project’s economic corridors. This means that the BRI definitely has to include Thailand into its connectivity masterplan to link all the mainland Southeast Asian countries together. Therefore, the high-speed railway project from China to Malaysia inevitably needs to consist of Thailand to provide a key access point from the China — Laos route to Laos — Thailand route.
The junta government of Thailand who is widely believed, by the public, to have preference in cooperating with Beijing rather than Washington as did the other junta counterparts in Africa and the Middle East. It undoubtedly caused public concerns, especially among the academic circle in which they express worried that Thailand might be in a grave danger from falling into Chinese debt-trap diplomacy. One of them, Prapat Thepchatree, suggested Bangkok not to be over-dependent on Beijing and avoid being involved in Beijing’s zero-sum game.
On the contrary, the Thai junta and its relating agencies are still repeatedly engaging in negotiations with Beijing and have definitely been involved in the high-speed railway discussion for almost 30 times since the beginning.
It turns out, from the last week’s negotiation, that Bangkok has not yet turned itself into being Beijing’s puppet. It has denied almost all of the Chinese offers that could lead to Beijing’s debt-trap and achieve a rewritten version of the deal in which Bangkok refused to grant the 99-year land lease to Chinese firms, and essentially use internal budget rather than relying on an excessive amount of Chinese loan.
Bangkok still managed to strike a deal where the construction plan will mainly use Thai local firms and workers, bundled with technology transfer and operational trainings. Furthermore, the junta government even requested Beijing to adjust the contract to be more flexible and suitable for the use of Thai locally made materials to lower the total costs of the project. So that Thailand can maintain an investment with China in a more sustainable manner without engaging into a debt-trap diplomacy like its Laos or Cambodian counterparts.
Thus, it could probably say that Thailand has not yet fallen into the China’s debt-trap diplomacy. Comparing to Laos and Cambodia, they had gotten a far worse situation than that of Thailand where they need to hand over their economic sovereignty to Chinese firms because of their over-dependence on Chinese investment. Not to mention Malaysia, which is no better than Thailand, when Mahathir finally came back for a renegotiation with Xi Jinping after the BRI project cancellation announcement in Malaysia last year.
It looks like Mahathir was holding a more bargaining chip than China, but as a matter of fact, the reason Mahathir came back to renegotiate with China is that Malaysia cannot afford to pay the fines in case of breaching the contract and that Malaysian economy is relying heavily on China’s funding. Assessing from this rationale, Thailand’s progress in high-speed railway construction project would make an ideal case among its neighboring countries, as Bangkok still has a potential to bring China’s compromise to the negotiating table.
The Thai junta government might easily be conceived as politically unreasonable in domestic issues, but when it comes to national interest, or an economic sovereignty, there is always a bigger force, the business community, behind that will prevent the junta from handing over its sovereign interest to China. The Thai business elites are well known for their lobby, and they have realized what had happened to Thai neighbors. It will cause a great damage for both the junta government and the local business elites, if they did not delay and keep demanding for the renegotiation.
It is, of course, seen as a slow progress for the construction of Sino-Thai high-speed railways in these years. But the junta is not mainly who to blame in this, as there is a conflict of interest between interest groups going on below the surface. And the most important part, is that both the Thai elites and the junta have understood that they are in a position that holds a higher bargaining chip over China.
Since it is evident that China has already secured all the projects it needs in Thai neighbors, it will provide Beijing nothing if the high-speed railways, that aim to connect China to Malaysia, cannot access Thailand. This makes Thailand an important strategic location for China to gain, and it, besides, gives the junta and the Thai elites a strategic opportunity to exploit Beijing. By delaying the process and asking for renegotiations to extract better benefit from Beijing.
Thailand is far from falling into a debt-trap diplomacy as long as it can find its own position to fit in the BRI project.
