BEIJING: It is a well-known fact that Pakistan and Sri Lanka used to depend on China for economic development. However, the current financial crises in the two developing nations have shown that the over-dependence on China for economic development could be a miserable option.

China is known for taking advantage of the plight of developing countries by lending them money. Its policy is to take over the strategic areas of these countries when they can not repay the money. The United States has described these Chinese loans as "debt trap" diplomacy.

Both Pakistan and China used to receive immense economic assistance from China. Pakistan owes most of its debt to China. The China-Pakistan Economic Corridor project, which aims to connect Gwadar Port in Pakistan's Baluchistan with China's Xinjiang province, is a flagship project of China's BRI. Several analysts have pointed out that China is using "debt-trap" diplomacy to gain access to strategic assets in Pakistan. The infrastructure projects in Pakistan were financed by Chinese banks.

Meanwhile, the crisis in Sri Lanka was apparent after the pandemic that dried up the international tourist traffic to the island nation, one of its main foreign exchange earners, the country's debts spiralled and foreign exchange reserves shrunk as the end result of reckless borrowings from China to finance infrastructure projects, reported The Hong Kong Post. With tourism hit by the pandemic, the economic structure of Sri Lanka, which was already tottering under the heavy burden of loans, crumbled. A major part of this debt was owed to China, which accounts for nearly USD 8 billion.

This debt burden was a result of China's Belt and Road Initiative (BRI) projects like Hambantota Port and Colombo Port City for which Chinese agencies lent large amounts to Sri Lanka under stiff terms of repayment. Agitations are going on across the country demanding the resignation of the Rajapaksas who are clinging to power. Although both the countries have sought China's help in the crisis situation, China has not offered any help so far.

Sri Lanka has simultaneously approached India and China for assistance in overcoming this crisis. India was the only country to provide basic necessities, including rice and diesel. India has so far provided assistance of nearly $ 250 crore, including a $ 100 crore credit line. Sri Lanka had also demanded another $ 250 crore from China. But China has not made any decision in this regard. Therefore, there are reports that Sri Lanka is asking India to provide assistance of another $ 200 crore.

Chinese loans have come at a hefty cost for Pakistan and Sri Lanka. The slow bleeding would have continued for a few more years without the extent of the damage being recognized by them. While the warnings by experts have been ignored by Colombo and Islamabad alike, the pandemic, followed by the Ukraine-Russia conflict, has exposed how vulnerable both economies had become due to indiscriminate borrowing from China.