The small, impoverished landlocked Southeast Asian nation of Laos is a focal point of China’s ambitious Belt and Road Initiative and also emerging a case study in how Beijing is handling a burgeoning debt crisis in the country. Just as in a number of African countries, Laos is increasingly unable to repay the massive infrastructure loans that it borrowed from China to build badly-needed infrastructure including railways and power transmission.
But there are some interesting experiments going on in Laos that might shed some light on how China plans to handle some of its debts in Africa. Specifically, a debt-for-equity swap with the country’s state-owned power company could be an option that is employed in places like Kenya where the government is already behind on some of its loan payments.
Hong Kong University of Science and Technology Research Assistant Professor Kelly Wanjing Chen has been closely following the debt crisis in Laos and published a paper on the topic this fall. She’s also an expert on Chinese debt financing in the global South. Kelly joins Eric & Cobus to discuss the Chinese debt crisis in Laos and whether there are any lessons that can be applied to what’s happening in Africa.
- Economic Geography: Sovereign Debt in the Making: Financial Entanglements and Labor Politics along the Belt and Road in Laos by Kelly Wanjing Chen
- The Diplomat: Laos Stumbles Under Rising Chinese Debt Burden by Sebastian Strangio
- The World: How a Chinese company took control of an entire nation’s electrical grid by Patrick Winn
Kelly Wanjing Chen is a research assistant professor in the Division of Social Science and a Junior Fellow of the HKUST Jocky Club Institute for Advanced Study. She received her PhD in geography from University of Wisconsin-Madison in 2020. Her research focuses on the relation between state and capital in the ongoing globalization of Chinese political economy. Dr. Chen’s current project examines how the Chinese government mobilizes the offshoring of capital from afar by invoking the imaginative geography of ‘One Belt One Road’ (OBOR). Following the footprint of Chinese investors who are lured by the vision into Laos, she demonstrates how their discrete and improvisational practices of investment making collectively work to bring OBOR into reality.