Geoeconomic policies—defined as the use of economic tools to achieve geopolitical ends—serve as a corollary to more traditional security policy. When used correctly, they can help advance restraint and shift competition with great or regional powers away from zero-sum militarized security and towards positive-sum trade and global economic investment.

In geoeconomic competition, a nation can strengthen its influence by either deepening engagement with targeted countries or degrading the competitor. Tariffs and export restrictions, for example, can be used as tools to promote domestic industry at the expense of foreign competitors. On the flip side, government-supported international infrastructure projects can promote the economic growth of international partners while supporting the global business endeavors of its own domestic firms, thus promoting domestic interests while pursuing its geoeconomic ends. 

While the Donald Trump administration has primarily used geoeconomic policy as a stick against countries that it says have used the international system to promote their own interests at the expense of American interests, the Chinese have been using a subset of geoeconomic policy—namely financing infrastructure investments across the Global South—to promote their interests while seeking to buoy foreign economies to an extent far greater than has the United States.

The Chinese are seeking to become a reliable partner for Global South countries across parts of the world with abundant critical minerals, other essential resources, and geopolitical clout. This has been particularly true of China’s geoeconomic engagement in Africa, where Chinese lenders provided $182.28 billion between 2000 and 2023, though its investment has dropped significantly in recent years. Following a peak of nearly $30 billion in annual loans in 2016, Chinese loans to the continent fell to just $1 billion in 2022, rising to $4.6 billion in 2023, the last year with complete data.

China hawks have often deployed the term “debt-trap diplomacy” to discredit China’s geoeconomic engagement with the Global South, particularly the Belt and Road Initiative (BRI). Debt-trap diplomacy refers to a practice allegedly aimed at ensnaring these countries in unsustainable debt to acquire their strategic assets in return, thereby maintaining leverage over the debtor countries. 

China has emerged as a major bilateral lender for African countries in recent years. Yet, as a growing number of its partner countries struggle with default risk, China faces criticism for unsustainable lending practices and for a perceived reluctance to coordinate debt restructuring with the Western-backed International Monetary Fund (IMF) and the Paris Club—a group of wealthy creditor countries ostensibly aiming to provide sustainable financial support and relief measures to heavily indebted countries. All of this resonates with the narrative of China’s “debt-trap diplomacy.” 

Nonetheless, such a narrative fails to hold up. Numerous studies, as well as influential pieces written by Deborah Brautigam, found no concrete evidence that China intentionally practices “debt-trap diplomacy”. In fact, detailed quantitative analyses, including on the debt structures of countries at risk or already in default—of which China is not the sole major creditor—and China’s, albeit insufficient, debt-relief measures, easily dispute the “debt-trap diplomacy” narrative. 

Rather than an intentional trap, the issues emerging from China’s international engagement in its pursuit of regional influence and advancement of its economic interests are primarily the results of unclear guidance, poor management,........

© The National Interest