As Kyrgyzstan’s economy struggles, the country falls victim to China’s debt trap diplomacy

By: Eli Bradley

As anti-China sentiment continues to foment in Central Asia, Kyrgyzstan finds itself in an increasingly difficult position to repay its debts to Beijing. Kyrgyzstan has one of the highest debt levels to China as a percentage of GDP in the world, owing over 25% of its GDP to its powerful neighbor. Kyrgyzstan is suffering from an economic downturn due to the COVID-19 pandemic, and the frustration of Kyrgyz citizens about dealings with a country that continues to imprison Uyghur minorities and ethnic Kyrgyz across the border is steadily growing.  

As a result of what is often referred to as “debt trap diplomacy,” Kyrgyzstan has few solutions for and minimal leverage in addressing its debt crisis. Recently elected President Sadyr Japarov talked of selling the Kyrgyz mining rights of the Jetim-Too iron deposit to relieve some of the country’s debts, and other lawmakers are considering surrendering partial ownership of the Kyrgyz energy sector to China. 

However, Japarov is being pushed on all sides of the issue, forced to navigate staying true to his nationalist campaign platform while working with China to pay down the debts left behind by the previous administration. Limited relief was negotiated in November of 2020 to defer some debt with 2% interest until 2022-2024, but China offers no broad relief or solutions for a country with a quickly contracting economy.  

Many details of past loans remain unknown to the public, but the Chinese contracts did stipulate that any legal settlements would be carried out in Chinese arbitration courts. This new jurisdiction has added to fears about China’s larger “salami slicing” strategy of performing small actions that are not enough to spark confrontation alone, but which eventually accumulate to a result that would be considered unlawful if carried out all at once. In this case, Kyrgyz sovereignty and foreign policy independence are increasingly subsumed by China. 

Anxious about raising tensions with Beijing, Kyrgyz government officials have tried to avoid mentioning the detention of Kyrgyz citizens in Chinese re-education camps; in December 2018, then-President Sooronbai Jeenbekov responded to questions about Chinese internment of ethnic Kyrgyz by stating that “Kyrgyzstan cannot interfere in the internal affairs of China.”  

With no solutions in sight, the Kyrgyz debt has served as a rallying cry for anti-China protests in the region and a warning about Chinese debt trap diplomacy.  

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