As you said, 25 million USD is pennies for China, why not just lend in yuan?
That’s extra 25 million USD equivalent for Burkina Faso has to earn from the French (because only the French can print CFA franc, not China) to pay back Chinese creditors. At least with yuan, Burkino Faso can trade with China to earn yuans to pay back their creditors (although it is still very reasonable to cancel all those debt together).
In contrast to Western propaganda that China is setting a “debt trap” in developing countries, it’s more accurate to say that China is helping to set a “debt trap” for Western imperialists.
It is clear that China has been accumulating so much of these junk papers that they don’t know how to spend them. That’s the problem with huge trade imbalances, where the US can just print and print and print to import cheap stuff, and China is forced to accumulate the junk papers but is not allowed to use their huge US dollar reserves to purchase anything critical. In other words, Chinese labor and resources in exchange for junk papers.
That’s the same problem with “petro dollars”, where petroleum export countries are forced to sell their oil in USD but they are not allowed to spend them to industrialize their own countries, other than to buy US weapons and treasury bonds. The Saudi oil tycoons are allowed to enrich themselves with luxury items, but anything that would help industrialize and develop their countries is out of the question.
That’s also why China has been lending out so much dollars in Belt and Road, to get away from buying US treasuries, which to be fair is good for the economy but it comes at the cost of having no control over the currency. The debtor countries now have to earn US dollars to pay back China, so just kicking the can down the road.
Keynes had proposed bancor as a competing system for Bretton Woods, and it would not have come to this if it had been adopted back in 1944.
As you said, 25 million USD is pennies for China, why not just lend in yuan?
That’s extra 25 million USD equivalent for Burkina Faso has to earn from the French (because only the French can print CFA franc, not China) to pay back Chinese creditors. At least with yuan, Burkino Faso can trade with China to earn yuans to pay back their creditors (although it is still very reasonable to cancel all those debt together).
In contrast to Western propaganda that China is setting a “debt trap” in developing countries, it’s more accurate to say that China is helping to set a “debt trap” for Western imperialists.
It is clear that China has been accumulating so much of these junk papers that they don’t know how to spend them. That’s the problem with huge trade imbalances, where the US can just print and print and print to import cheap stuff, and China is forced to accumulate the junk papers but is not allowed to use their huge US dollar reserves to purchase anything critical. In other words, Chinese labor and resources in exchange for junk papers.
That’s the same problem with “petro dollars”, where petroleum export countries are forced to sell their oil in USD but they are not allowed to spend them to industrialize their own countries, other than to buy US weapons and treasury bonds. The Saudi oil tycoons are allowed to enrich themselves with luxury items, but anything that would help industrialize and develop their countries is out of the question.
That’s also why China has been lending out so much dollars in Belt and Road, to get away from buying US treasuries, which to be fair is good for the economy but it comes at the cost of having no control over the currency. The debtor countries now have to earn US dollars to pay back China, so just kicking the can down the road.
Keynes had proposed bancor as a competing system for Bretton Woods, and it would not have come to this if it had been adopted back in 1944.