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Papua New Guinea and China’s Debt Squeeze
A debt trap? Not quite. But PNG’s telecom industry is a showcase example of how debt to China weighs down governments and constrains choices.
By
February 02, 2021
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The discussion of China, debt, and infrastructure, is beset by stereotypes. On the one hand, China would prefer to be seen as a development partner. According to this view, it’s a trusted, non-judgmental provider of expertise and technologies, giving countries a quick step to development. On the other hand, China is seen as setting debt traps, ensnaring smaller states in schemes that lead to the forfeiture of strategic assets. Research by Lee Jones and Shahar Hameiri has called the debt trap a “myth.” They argue that local factors, poor choices, and corruption lead to countries being swamped by debt. In this view, the loans offered by China are not predatory or strategic, just tactical and incremental.