Korean, Chinese and Japanese top diplomats to meet in Seoul

China has been so far pursuing the "financial diplomacy" in which Beijing lends loans to developing nations in Latin America and Asia to expand its international influence around the globe. Asian Infrastructure Investment Bank (AIIB), which is about to form, is a part of China’s financial diplomacy strategies. However, China’s policy of financial diplomacy is now faced with challenges around the world, according to the U.K. financial daily Financial Times (FT) on Wednesday.

Sri Lanka, which has borrowed 1.5 billion U.S. dollars from China in a port construction project, decided to suspend the project and requested to ease the terms of its loans. Sri Lanka’s new leader, Maithripala Sirisena, warned to the public, saying, “If this trend continues for another six years our country would become a colony and we would become slaves.” In African countries, "antipathy toward China" has been heightened as they evaluate that China is interested only in natural resources, not enthusiastic in utilization of local human resources and transfer of technology.

Some countries that borrowed money from China are now at the verge of default crisis due to falling oil prices and sluggish economy, becoming a headache of the international community. Ukraine, which suffers a severe chaos caused by conflicts and battles, is heavily in arrears in its Chinese lending of 18 billion dollars. Zimbabwe has failed to repay a much smaller amount of 2 billion dollars. The situation is not that different in other recipients of Chinese policy-driven finance, such as Venezuela, Ecuador and Argentina. “China is taking on too much risk in its lending to regimes that are unstable in Africa, Latin America and even in some Asian countries,” said Chinese Academy of Social Sciences professor Yu Yongding.

China recently refused the entreaties of Venezuela seeking a bailout of 56.3 billion dollars in loans.

pen@donga.com