According to a report from VentureBeat, U.S.-based Niantic, the company behind the mobile and augmented reality gaming behemoth Pokémon Go, is touting its

What is China’s debt trap? According to Western and Indian media, Sri Lanka and Pakistan are on the verge of economic collapse. Is this right?

  • Is China colonizing Sri Lanka ? No.
  • Is Sri Lanka on the verge of collapse ? No
  • Is the Chinese debt trap Western propaganda? Yes .

Chinese loans are just 10.6% and not growing of the total foreign loans taken by Sri Lanka over the years and most are concessionary and given at a low interest rate of 2%. This is in contrast to the many loans obtained from western institutions like the IMF,World Bank and the ADB which provides loans for far beyond 5% interest. In reality, Sri Lanka owes more to US investors than China with much more strings attached, official statistics show that 39 % of Sri Lanka’s overseas debt is borrowed from international markets – largely US based institutional investors[1]

Lets analyze these western loans first and all the conditions that were attached to them

From 1956 to 1977 Sri Lanka followed a closed economic system inspired by India. Under the philosophy of SWRD Bandaranaike everything was to be produced locally and exports were curbed or minimized .During this time there was a massive industrial growth in the country and Sri Lanka barely had any debt[2] .

In 1977 there came a new government ,this government was leaning towards capitalism and open markets. They basically liberalized our economy and allowed foreign goods from the west to flood into Sri Lanka. This created a huge trade deficit and killed off the emerging industrial base in Sri Lanka. By 1986 Sri Lankas foreign debt was at $ US 4063 million.

To pay off the ever increasing debt Sri Lanka resorted to seeking help from the IMF and World Bank. When IMF gave loans to Sri Lanka we had to do whatever IMF asked us to do . IMF started to act like a nanny to Sri Lanka, Sri Lanka had to dance to the tunes played out by the IMF. We had to change social and economic policies because of this . Sri Lanka which proudly boast a history of 2000 years virtually became a slave to the west. To top this off a dangerous and a brutal Civil war was ongoing in Sri Lanka since 1983.

Worst part is thanks to the unrestricted openness Sri Lanka had, we became a hub for drug transshipments. Drugs were virtually non-existent before the open economy but they became rampant in the country [3]

Sri Lanka became a hub for other anti-social activities like money laundering and pedophilia for westerners[4] .

We were taking loans ,dancing to the tunes of the west but there was literally no progress.

Things were so bad we literally had to take loans to import rice.

People were frustrated and elected in a new leader and a new government ,one with a populist sentiment.

After a long time Sri Lanka had a leader who did not dance to the tunes of the UN or the west.Because of this he managed to stabilize the country by ending the civil war in Sri Lanka. Before he became the president Sri Lanka had more Child Soldiers than Congo

There were bus bombs ,car bombs everywhere. The country was extremely unstable .

Ending of the Brutal civil war was good news for everyone. Now Sri Lankans could walk in the street without the fear of death.

The west really disliked the new Sri Lankan government. West started to isolate Sri Lanka over its populist stances. Pakistan was literally the only country aside from China that stood in support of Sri Lanka when we needed support the most.

China came in

Though China had diplomatic and very strong ties with Sri Lanka since 1956 their presence grew even stronger under this new government. They took the place that the west had in Sri Lanka since 1977. But China did not treat Sri Lanka the same way the IMF & World Bank did . They never saw us as babies that needed to be instructed and bottle fed. They allowed us to follow our own policies and develop in the way that was suited for us.

Unlike the west did ,China did not tell us who to be friends with and who not to be friends with. We invited the west and India to join together and invest in Sri Lanka[5] .

Sri Lanka underwent a massive infrastructure growth thanks to China

Kilinochi Sri Lanka in 2004

Kilinochi Sri Lanka in 2011

Sri Lanka had constant power cuts before 2009. When I was in school I remember studying using kerosene lamps at night . But thanks to the new Chinese power plants we got 24/7 electricity .

Because of this basic infrastructure growth a country that literally no one wanted to invest became a top investment spot [6]

A lot of foreign investors started to invest in Sri Lanka from all over the world. The Sri Lankan GDP went from 20 billion USD in 2005 to 84 billion USD in 2015.

Because of the new infrastructure Sri Lankan tourism started to skyrocket . Record number of tourists started arriving in Sri Lanka.

Crime rates,rapes ,murder rates started to drop rapidly. Once a country savaged with war turned into one of the most peaceful countries in the world.

The debt reduced rather than increased

As more and more tourists came into Sri Lanka and more investors came into Sri Lanka the government debt to GDP actually reduced significantly . Once a country that was borrowing money to eat now had money to spend on its people

It was a construction boom

New roads,schools,buildings ,houes etc were being built everyday

Slum complex 2006

This is how it looks now .The government started building apartments for slum dwellers.

Sri Lanka was getting cleaner,greener and better

Overall Chinese investments befitted Sri Lanka more than it harmed Sri Lanka

But wait what about the Hambantota port ?

The biggest fuss surronding Chinese investment in Sri Lanka is over one port .So let me explain it too Due to various reasons including foreign meddling (Indian spy’s role alleged in Sri Lankan president’s election defeat ) the Sri Lankan government changed . Sri Lankan political parties love to play the take revenge game on their rivalries so the case of the Hambantota Port, it was not an example of Sri Lanka not being able to service its loans, it was more of a domestic political issue where one party wanted to show the public that due to the actions of another party the country has fallen into a crisis. Which is not the real case, there was enough time to pay off the debts of the Port and the port, still not even half way built does make a seizable income , this port is also not as big as the Colombo Port. Infact the current prime minister has played a similar stunt in 2002 by selling off the highly profitable Lanka oil company and refineries to Indian oil company.

Ceylon Petroleum corporation was established in 1962, It was making a huge profit yet the prime minister sold it to India and renamed it Lanka Indian Oil Company for a billion dollar deal. Luckily some shares of the Ceylon Petroleum corporation was taken back and the Petroleum corporation still exists .

If the government really could not afford the Hambantota port then why are they building new airports ? China did NOT ask for the port. It was the PM of Sri Lanka who gave away the port by force.

So why does the American media lie ?

The answer is simple ,they have taken the place of the US and Europe. They did not take this place by mass murdering innocent people like US did in Libya but by wining the hearts and minds of people.

The US has left a legacy of death and destruction.

China has left a legacy of progress and hope. Please share this to stop the lies spread by western media on China-Lanka relations.


[1] LankaWeb – Sri Lanka is indeed trapped, but not by Chinese debt – Embassy

[2] LankaWeb – Pre-1977 closed economy – Some benefits



[5] India, Sri Lanka should enhance unbroken lineage of friendship: D M Jayaratne

[6] Sri Lanka: 2010’s Best-Performing Global Market