The first thing to say is that China, despite all the hype, is not the main creditor for the Global South. Private creditors like investment funds and big banks hold more than 50 percent of the developing countries’ sovereign debt. The other holders are the multilateral predators including the World Bank, IMF, and traditional imperial powers in the Club of Paris.
China has now established itself as a new creditor. Its state banks, state-owned enterprises, and private enterprises have dramatically increased their loans to the Global South, becoming holders of large amounts of sovereign debt.
Unlike the World Bank and IMF, however, China does not impose neoliberal conditionalities and structural adjustment programs. But let’s be clear, it is not philanthropy. It is a new capitalist superpower locked in competition against the United States, the European powers, and Japan.
As such, it uses its loans to advance its interests. It funds countries to develop industries to export raw materials to China, open their markets to Chinese companies, and secure their allegiance geopolitically.
Amid the new debt crisis, the IMF and World Bank have told China to reduce its holdings and renegotiate them. China has responded by saying that it already is forgiving some debt, restructuring it, and postponing payments. They are doing so to get indebted countries to follow their foreign policy dictates.
For instance, China has convinced fifteen to twenty countries in Africa to renounce recognition of Taiwan and force Taipei to close its embassies. As a result, there is only one country in the continent that recognizes Taiwan as an independent country.
At the same time, China has exposed the hypocrisy of the World Bank and IMF’s pretension to debt cancellation. It has pointed out that while the international financial institutions forgive portions of debt, they never abolish it. It has thus called the other powers’ bluff and exposed all their debt renegotiation as a charade.
China is right. Take the example of Congo. The IMF and World Bank claimed to have stopped the country’s repayment on its debt, but they are lying. In reality, they have set up a trust in which imperialist powers like France, Belgium, and the Netherlands deposit funds for Congo. The IMF and World Bank then draw funds from that trust for payments on their loans.
China has also objected to the imbalance of power in the IMF and World Bank. They have highlighted that the United States still holds more than 15 percent of the votes, enabling Washington to effectively control both of them. By contrast, China, despite its status as the world’s second largest economy, has only 6 percent. So, it has made the reasonable demand for the redistribution of voting power.
Frustrated with Washington’s refusal to abide by its request, China along with Brazil, Russia, India, China, and South Africa have established the BRICS Bank—the New Development Bank. It is headquartered in Shanghai and its new president is the former president of Brazil, Dilma Rousseff. China claims that it is an alternative to the World Bank and IMF. It is not. It funds exactly the same kind of extractivist projects that Western capital has backed in the developing world.
Despite opening this multilateral bank, China’s main way of granting loans to countries is not through it, but through its state banks, state companies, and private corporations. Why? Because China knows, just like the United States, that while multilateral banks are useful, the best way to control countries is through bilateral financial relations. So, China’s banks and corporations remain central to their international lending operations.
It is following the strategy established by the United States with the Marshall Plan after the Second World War. Washington provided grants and loans to countries in a bilateral fashion to fund reconstruction and secure its geopolitical influence against the Soviet Union. China is doing the same to secure allegiance from the Global South and compete with the old imperialist powers.
While we should call attention to it, we must avoid any demonization of China. It is no worse than the United States, France, or Britain.
The movement for debt cancellation is in a difficult situation. We were inspired by Castro’s call for abolition of the debt and have campaigned for it ever since. We have made the demand central to global discussions but have also suffered some profound setbacks like Syriza’s capitulation to the European Central Bank and international financial institutions in 2015.
Over the thirty year period from 1985 to 2015, we have seen massive waves of struggle, reaching a high point through the Global Justice Movement of the early 2000s through 2008 when Ecuador under Rafael Correa suspended its debt repayments. In 2000, we organized 30,000 people to march against the World Bank in Washington and mobilized similar numbers against other summits of the international financial institutions and great powers.
Since Syriza’s capitulation and Correa’s turn to the right, the movement for cancellation has been more difficult, with some exceptions like Argentina, where hundreds of thousand people have protested in the streets against the IMF. But in general, states have balked at canceling their debt and our movement has not been able to build popular mobilization on the scale of the early 2000s.
At the same time, CADTM has actually expanded our organization and capacity. For example, a big Mexican coalition of more than twenty organizations just affiliated with us. It includes people from unions as well as the people from the Zapatistas, feminist groups, peasant organizations, ex-Maoists, Trotskyists, and others critically supporting Andrés Manuel López Obrador’s so-called progressive government.
We have a very active organization in the U.S. colony of Puerto Rico and have built a large network in North Africa called the North African Network for Food Sovereignty. In addition to our long-established organizations in the French-speaking countries of western Africa, we just added new ones in eastern Africa, welcoming a group in Kenya, a pivotal English-speaking country in the struggle against debt.
As a result, we now have affiliates in over thirty countries. In general, the organizations are not massive, but they are militant and activist in nature. And our website receives over 200,000 million hits a month.
We are bringing all our affiliates together in a counter-summit this October against the next assembly of the World Bank and IMF in Marrakesh, Morocco. It will be challenging to organize because of the repressive nature of the monarchy that rules the country. We have an organization there called ATTAC-CADTM Morocco that will host the counter-summit.
But, in an indication of the difficulties we face, ATTAC-CADTM Morocco has no legal status and one of its members was sentenced to six years in jail for activism and has already served three of those years. So, we anticipate that the monarchy will try to interfere with our counter-summit with both manipulation and repression.
The monarchy has already set up a fake civil society organization that has called for an alternative summit to the IMF and World Bank. In reality, it is a counter-summit against our counter-summit.
The fake civil society organization calls it an alternative summit for a reason. They have invited leaders of the IMF and World Bank to participate in a dialogue. They want to work with the international financial institutions, not challenge them. So, those participating in that summit will receive aid in attending and be welcomed by the monarchy to Morocco.
Despite this competition, we think we will be successful in organizing our counter-summit, because up until now the monarchy has balked at repressing foreigners. Of course, we expect them to create problems for us, interfering with our ability to secure venues, but not open repression.
In fact, we will use the counter-summit to help our comrades who have been repressed and jailed by the monarchy. We will launch a campaign to free all the political prisoners in the country. So, we are enthusiastic and confident to pose a challenge to the monarchy, IMF, and World Bank.
This content originally appeared on CounterPunch.org and was authored by Ashley Smith.