by Richard Schulman
Founders Broadsheet seems to have been the first publication worldwide to call for holding China financially liable for the worldwide destruction of lives, employment, and wealth caused by the Wuhan virus. The response by some to that call was disbelief and ridicule. “Just try and collect it!”, “Sovereign nations can’t be sued”, and the usual unprintable stuff. To all these skeptics, there is a simple response as to how this can be done: repudiate debt, namely, the trillions of dollars owed to:
- Chinese government entities,
- pseudo-private companies subsidized by national, provincial, and local Chinese governments,
- companies that have stolen intellectual property from non-Chinese companies, and
- companies that benefited from government favoritism at the expense of their foreign competitors.
Cancellation or repudiation?
The Chinese government could, of course, do the diplomatic thing in advance of such repudiations by simply canceling the debts on its own initiative. We doubt it will do this. The communist government led by Xi Jinping is brazenly trying to deny responsibility for creating the pandemic. It is rushing aid to the very countries brought low by its own irresponsible conduct. This is like a volunteer fireman rushing to put out a fire he himself started.
Our publication was also one of the first to pin the blame for the pandemic on the Beijing communists, where it rightly belongs, not local Wuhan officials who were only following Beijing’s directions. But the chorus is now becoming widespread, not just in political venues but also scientific and religious circles.
We note that the Chinese people have been as much victimized by Xi’s gang of Beijing-centered communists as the rest of the world has.
Relief for the developing sector
The economic relief that would come to the developing sector from repudiating debt to China would be profound. As a recent Wall Street Journal article observed (March 31, “Hidden Chinese Lending Puts Emerging-Market Economies at Risk”):
An estimated $200 billion of emerging-market debt owed to China has gone unreported in official statistics in recent years. The money is upending assumptions made by yield-hungry investors who have poured roughly $2 trillion into risky emerging markets over the last decade.
Wuhan pandemic prevents repayment
Thus, the Xi Jinping government coronavirus pandemic not only crashed the world economy, so that developing countries now can’t sell their commodities to feed their people and pay back external debts, but the nondisclosure clauses by which China hid the loans it was shackling developing countries with were hidden from Western investors, who now are faced with depreciated or worthless loans issued on the basis of the deceptive public statistics.
Even before the market crash, some borrowers were buckling under their debts to China. Pakistan turned to the International Monetary Fund in 2018 for a bailout. Sri Lanka was forced to cede China control of a strategically located port to shore up state finances.
Developing sector debt to China is large and widespread
Statista writes:
According to research recently published by the Kiel Institute for the World Economy, there are seven countries in the world whose external loan debt to China surpasses 25 percent of their GDP. Three (Djibouti, Niger and The Republic of the Congo) are located in Africa, while four (Kyrgyztan, Laos, Cambodia and the Maldives) are in Asia….[T]he world map of debt to China amassed through direct loans (excluding debt holdings and short-term trade debt) shows that a majority of countries heavily in debt to China are in Africa, but that Central Asia and Latin America follow close behind.
The advanced economies too
It is not just the developing sector that China owes debt relief to for the Wuhan pandemic — but compensation is at hand. US debt to China was 1.07 trillion dollars at the end of 2019. Repudiating debt of that magnitude would just be a fraction of the multiple trillions of dollars the Chinese communist pandemic is costing federal, state, and local government, not to mention the private sector — both companies and individuals. Statista adds:
[E]xternal debt to China through portfolio holdings is concentrated in developed nations and passes the threshold of 10 percent of GDP for Germany and the Netherlands. It amounts to between 5 and 10 percent of GDP in the U.S., Canada, France, the UK and Australia.
We have undoubtedly only scratched the surface of Chinese liabilities held outside China. Repudiating these would in no way fully compensate for the damage the Xi Jinping regime has done, but it would be a start.
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