The news of China taking over Sri Lanka’s strategic port and 15 000 hectares of land on a 99-year lease have caused the Chinese embassy in Zimbabwe to deny that assets are used as collateral for loans:
“In the case of Zimbabwe, there is no mortgage of resources for now between China and Zimbabwe, and we never force any conditions on any country. We are equal, we are brothers and sisters,” he said.
Although the details of such loans are secret, he is probably technically correct. Here’s how China’s takeover of Africa seems to be playing out:
- Find a country notorious for failed debt due to corruption
- Provide infrastructure loans
- Wait for the debt to become unpayable
- Help the current leader stay in power
- In return for giving up the asset as partial debt repayment
You don’t have to have a mortgage over an asset to negotiate the sale of it to pay off said debt.