Sri Lanka as cautionary tale: Analyst warns vs China debt trap

Patrick Quintos, ABS-CBN News

Posted at Nov 20 2018 10:34 AM | Updated as of Nov 20 2018 11:22 AM

Sri Lanka as cautionary tale: Analyst warns vs China debt trap 1
A group of Sri Lankan visitors at the deep water shipping port watch Chinese dredging ships work in Hambantota, 240km (149 miles) southeast of Colombo, March 24, 2010. Reuters file photo
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MANILA - The Philippine government must be smart in dealing with China, a Peking University adjunct professor warned Tuesday, ahead of Chinese President Xi Jinping's visit here. 

Jaime Florcruz, said agreements that will come out of Xi's visit to Manila should be tangible and should have long-term benefits. 

Florcruz also said the government must see what happened to Sri Lanka as a "cautionary tale" to avoid falling into the so-called "China debt trap." 

"We should take them as cautionary tale... It shows that we need to be smart, closely calibrate the pros and cons. We need to be assured we are able to pay back the loan," he told ANC. 

Sri Lanka, a developing country, has relied on billions of dollars of loans from China to push through with a lot of its infrastructure projects. 

But last year, it had to lease its Hambantota port to a Chinese operator for 99 years in order to pay its debt to Beijing, an incident that happened to other countries that dealt with China.

Manila is expected to sign a memorandum of understanding with Beijing on its Belt and Road Initiative during the 2-day state visit of Xi. 

Florcruz said deals with China are always welcome as long as it would not compromise the Philippines' sovereignty and its territorial claims. 

In the recent Asia Pacific Economic Cooperation Summit, US Vice President Mike Pence alleged China's loans come with strings attached and build up "staggering debt" for poorer countries. 

But the Chinese President insisted the initiative was not a "trap" and there was no "hidden agenda." Xi even slammed the "America First" trade protectionism, which he said is "doomed to failure."