Trade war: US can start to reverse China’s ‘debt-trap diplomacy’

The real Chinese trade war isn’t about tariffs. It’s about freedom to navigate trade routes on the high seas.

Trump didn’t say it at last week’s G20 summit, but he understands the problem. “China seeks to displace the United States in the Indo-Pacific region, expand the reaches of its state-driven economic model, and reorder the region in its favor,” Trump said in his National Security Strategy, released a year ago. “Contrary to our hopes, China expanded its power at the expense of the sovereignty of others.”

So what can he do about it? Viewing Chinese power projection in traditional military terms misses the point. Beijing subverts other countries with money and influence, eroding their national sovereignty.

In a strategy called “debt-trap diplomacy,” China finances huge, unviable infrastructure projects in poor countries, charging high-interest loans. When the loans can’t be repaid, China seizes the physical infrastructure, at the expense of the debtor country’s sovereignty.

The US military calls this “weaponizing capital.” It’s happening from South Asia to the Caribbean. China recently seized the deep water port it built in Sri Lanka, Navy Secretary Richard V. Spencer told a congressional panel last spring. “They’re doing that around the globe.”

In Panama, China dominates the newly expanded Panama Canal. In Nicaragua, China is funding an even wider canal to compete with Panama. In El Salvador, China is taking over a Japanese-built port for a “dry canal” to truck containerized cargo overland via Honduras to the Atlantic.

“We are concerned that it is not only an investment in a port, but that they will then want to do something with their military and expand Chinese influence in the region,” US Ambassador to El Salvador Jean Manes said in August. “Other countries, such as Sri Lanka, no longer control their ports” after the Chinese took over, she said.

We don’t hear much about Sri Lanka, but it’s important: The country’s new deep water port for megaships sits seven miles from one of the world’s busiest shipping routes.

China, Trump said in his national security strategy, is “patient and content to accrue strategic gains over time – making it harder for the United States and our allies to respond,” Trump said. “Such actions are calculated to achieve maximum effect without provoking a direct military response from the United States. And as these incremental gains are realized, over time, a new status quo emerges.”

It doesn’t have to be that way. The US can reverse its failure to counter Chinese imperialism. After losing its deep water port, Sri Lanka is now in a constitutional crisis. Its government is immobile. Its president, who negotiated the port construction deal with China, fired his rival, the prime minister who signed away Sri Lanka’s sovereign rights for lack of ability to pay. But the fired prime minister refuses to leave office, and his replacement cannot be seated. The country is becoming ungovernable as more Sri Lankans seethe at Chinese control.

Trump can use this opportunity quickly and cheaply to hand China what could become the first of a string maritime defeats from fed-up debt-trap countries. He should encourage Sri Lankans to take back their sovereignty. All he needs to do is urge Sri Lanka to break the political stalemate by holding a referendum for the people to decide whether their president can dissolve parliament and hold new elections.

No playing favoritism with factions or meddling in internal affairs. Simply empowerment of the people. After the referendum and elections, the US will be well-placed to work with the victors to help unravel China’s subversive, corrupt theft of poor countries’ sovereignty.

J. Michael Waller is a vice president of the Center for Security Policy in Washington, DC.