China, Samoa and debt-for-equity swaps

Abstract

Last year, Australia discovered the debt owed to Chinese banks by Pacific island countries. As the debate over China’s intentions in the region grew, commentators pointed to the possibility that Pacific countries might be compelled to accept debt-for-equity swaps if they could not repay. The port of Hambantota in Sri Lanka, where a Chinese company obtained a 99-year lease to run commercial operations in return for helping to pay the country’s debt, was the commonly raised example. Show more