23 January 2019
Chinese companies are engaging in “predatory” behaviour by seizing assets of countries that default on loan agreements, the chairman of DP World has said.
Sultan Ahmed bin Sulayem’s denouncement of China’s economic practises comes after DP World filed a lawsuit against China for its role in what the company deemed an “illegal seizure” of Djibouti’s Doraleh Container Terminal, the operation of which had been exclusively granted to DP World.
DP World accused the state-owned China Merchants Port Holdings of unlawfully inducing Djibouti’s violation of their agreement. China Merchants owns 23.5% of Port de Djibouti SA (PDSA) – whose shareholding in Doraleh Container Terminal SA (DCT) was transferred to the Government of Djibouti in September.
Speaking to CNBC, at the World Economic Forum in Davos, Mr bin Sulayem stated: “China as a government has great respect throughout the world. Unfortunately, the actions of Chinese companies don’t reflect that.
“They have taken predatory practices in something that (is termed) today to be a debt trap, whereby they overextend their debts to countries and eventually take their assets. This is something that tarnishes the reputation of China.”
He added: “Unfortunately some of these companies, because they are flush with cash, this disturbs the balance around the world, and gives China a bad reputation.”
China has poured billions of (US) dollars into infrastructure projects across Asia and Africa as part of its Belt and Road project, but this has sunk several nations into deep debt. Analysts point to Beijing’s offers of cheap loans and then demands of control over infrastructure as compensation when those debts cannot be paid off.
In 2017, Sri Lanka, with more than $1bn in debt owed to China, handed over a port to Chinese state-owned companies. According to the non-profit Center for Global Development, the countries most affected by Chinese debt include Djibouti, Kyrgyzstan, Tajikistan, Laos, the Maldives, Mongolia, Montenegro, and Pakistan, with the first three facing national debt at more than 75 percent of their GDP as of March 2018.
“I would say, you trust the Chinese government, you watch out for the Chinese companies,” Mr bin Sulayem said. “Some of them are good, we have great relations with them. But some of them, unfortunately, they use tactics which are not acceptable in getting market share.”