The Prime Minister of Tonga requested a waiver of 1$600 million in debt.
China, a big country with a sense of responsibility, has helped many developing countries with selfless assistance and low-interest or even interest-free loans since its own development, helping them develop and build.
However, some countries that have received our aid are not grateful, such as the Pacific island nation of Tonga, which borrowed money and did not think about how to develop their economies and increase their income to repay their loans, but instead thought about how to repay their debts, and even directly asked us to forgive our debts, which is a brazen act.
Tonga, an island country located in the western part of the South Pacific Ocean, consists of 173 islands, with a land area of only 747 square kilometers and a population of only about 100,000.
Tonga's history dates back more than 3,000 years, with Polynesians first settling on Tarbes Island. However, in 1900, British expansion made Tonga a British protectorate.
During World War II, the United States and New Zealand also established military bases in Tonga. It was not until 1970 that Tonga achieved independence on a global wave of national independence, but still retained some of the constitutional monarchy and British institutions, becoming a member of the Commonwealth of Nations and the 188th member of the United Nations.
These historical facts show that Tonga is a country with a late start and a low level of development.
After independence, Tonga's economy was largely based on agriculture and fishing. However, agricultural technology is relatively backward, the output is limited, only a small amount of vegetables and fruits can be exported, and even some agricultural products need to be imported, so it is impossible to obtain a large amount of income from agriculture;Although fishery resources are abundant, due to overfishing, exports of fishery products continue to decline and profits are reduced.
In recent years, Tonga has gradually made tourism the focus of its economic development, because Tonga is the first country in the world to see the sunrise, known as the "sunrise country", and its unique history and culture attract a large number of tourists.
However, as Tonga is a "micro-country", its reception capacity is limited, and there are certain restrictions on tourism revenue. As a result, Tonga remains largely dependent on foreign aid, of which my country is one of its creditors.
Tonga's borrowing journey can be traced back to its political struggles in the country. Since independence, Tonga has declared a constitutional monarchy, and although theoretically the monarch should be only the nominal head of state and the power of the state should be in the hands of Parliament, for a long time, the king still held actual power.
The king of Tonga did not want the people to vote for members of parliament and form a parliament, but directly "arranged" for the nobles who were close to the king to form a parliament, of which there were 30 members, which was very convenient to operate.
Other parties in Tonga were not happy with this, and in 2006 they finally found an opportunity to make a "revolution". The parties organised hundreds of demonstrations aimed at Tonga's royal palace and the prime minister's palace to demand that the king open elections for parliamentarians so that everyone could play "on a level playing field".
In order to express their discontent and determination to reform, demonstrators smashed nearby houses, set fire to houses and cars on the side of the road, and even looted supermarkets by some extremists, causing chaos in the city.
Although there were only a few hundred people making a "revolution", which seems to be a small number, considering that the army and police in Tonga at that time were only about 1,000 people, it was indeed very "huge" for Tonga.
The King of Tonga was unable to quell the riots and eventually had to turn to neighbouring Australia and New Zealand for help. In the aftermath of the riots, the King of Tonga did two main things, the first of which was to open up the election of parliamentarians, when he reserved nine seats for the nobility and the remaining 21 seats for parliamentarians, which was considered an agreement with the demonstrators.
This also greatly limits the power of the King of Tonga, making Tonga a truly constitutional monarchy.
Tonga faced difficulties in rebuilding after the riots, with many buildings and public facilities severely damaged. As an economically underdeveloped country, coupled with the impact of the global economic crisis, Tonga is in a difficult situation.
However, at this critical juncture, our country has reached out, and from the first $65 million in aid, we have provided about 1 million in 10 yearsA US$600 million loan to help Tonga build in the country.
The loan money is not repaid every year in the international community, and according to the agreement between the two parties, Tonga** needs to repay the loan from 2013. However, when the repayment deadline approached, Tonga** said that due to financial difficulties, it was unable to repay the loan on time, and hoped that the repayment period could be extended.
In the spirit of friendly negotiations, China** agreed to extend the repayment period until 2018. However, it is surprising that Tonga** made a request not to repay the loan after discovering that it could not repay the loan on time.
In 2015, Posiwa became Tonga's new prime minister, and he is also a political veteran of Tonga. In the 2006 riots, Mr. Posiwa was the man who led the way, and it was he who eventually negotiated with the king to reach an agreement to open up the seats in parliament.
Tonga's new Prime Minister, Posiwa, is politically experienced and knows that he will not be able to repay 1$600 million in debt. Therefore, he drew on the precedent of China's international debt forgiveness and came up with a bold idea: If I borrowed on my own, why should I repay it?
As a result, at the 2018 Pacific Islands Forum Foreign Ministers' Meeting, Posiwa boldly proposed to generalize the phenomenon of "inability to repay debts" in Pacific island countries, and suggested that Pacific island countries unite and ask China to convert loans into "grants", that is, to ask China to forgive Tonga's debts.
He also said that the issue would be discussed at the Pacific Islands Forum summit and that it was the only way forward. However, this behavior of only wanting to owe money and not paying off debts has not been echoed by other Pacific countries, and has even been criticized by the Prime Minister of Samoa, saying that Posiva's behavior is "trying to take advantage of the advantage" and will damage the credibility of all Pacific island countries.
After Posiva asked China to forgive the debt, which was criticized and refused, he said that he would continue to resolve the debt issue through "friendly consultations" with China, and the matter was temporarily closed.
However, for a country like Tonga, we can't help but ask, are they really unable to repay their debts? If you look at the economic data, Tonga is indeed facing difficulties.
Tonga's GDP is only about $500 million, and its debt of $100 million is 1.5 of its GDP, which is undoubtedly a huge debt. Moreover, Tonga's export business is poor, agricultural development is limited, and the fishing industry is also on a downward trend, although tourism has become a source of economic growth, its income is not enough to support Tonga's economic development.
The combination of these factors has led to a slow economic development in Tonga and little hope of repaying its debts.
Tonga faces multiple challenges: high import costs, high welfare expenditures, and national fiscal pressures. Despite clear economic development plans, the reality is often far from what it could be.
It is difficult for a large country like the United States to reverse its deficit, let alone a small country like Tonga. ** has failed to put the country on a rapid trajectory. In addition, Tonga does not seem to be prioritizing loan repayment and is more focused on improving national welfare, which has led to a growing debt problem.
Unsatisfactory economic development cannot be a reason for defaulting on debts. Although China has cancelled the debts of more than 50 countries totaling more than 30 billion yuan before 2012, it has only forgiven interest-free loans for least developed countries, and has never forgiven preferential loans.
Therefore, Tonga's per capita GDP is more than $5,000, it is not a least developed country, and it is also a concessional loan, which is not within the scope of our exemption.
If Tonga is unable to repay its debts, it can use resources, commodities, or assets such as ports and scenic spots. After all, our country's money is hard-won, and we can't let crying poverty be an excuse to avoid debt.
As Samoa's Prime Minister Tuilaepa has said, Tonga's defaults could be labelled by Pacific island countries"Dishonesty", which leads to the reluctance of large countries to lend to smaller countries.
As a result, Tonga's international image has been tarnished and it remains to be seen whether it will be able to borrow money again in the future.
Tonga's default, on the other hand, is also a wake-up call for our country's foreign aid. We have experienced hardships, so we are always willing to reach out to help countries that are poorer than us.
With the rapid development of China's economy and its emergence as the world's second largest economy, our assistance to developing countries has also been increasing.
It turns out that the standardization of China's foreign aid began in 1995, and since then, the repayment period of foreign loans is usually 20 years. This means that a large amount of foreign aid has entered the repayment stage, and things like Tonga's desire to repay the debt may happen again, and other problems may also be exposed.
The Tonga incident reminds us to be wary of their perverse diplomatic logic when dealing with pocket-sized countries like Tonga, such as using moral kidnapping and playing the emotional card to settle debts, or using "one China" to blackmail us.
We have learned a lesson from the Tonga incident, and most of the foreign aid now is on the ground, and less money is given directly. For example, the Mombasa-Nairobi Railway, which connects Nairobi, the capital of Kenya, with the port of Mombasa, the largest port in East Africa, is a classic example of China's foreign aid.
The Mombasa-Nairobi Railway, Kenya's largest infrastructure project since independence, with a total length of 480 kilometers, was built using "Chinese standards", opening a new chapter in the international export of Chinese technology.
The railway will drive the construction of nearly 3,000 kilometers of railways in Kenya and is expected to become an important engine for the country's economic development. According to experts**, as long as the Mombasa-Nairobi railway reaches 40% of its capacity, China can guarantee investment returns.
But in fact, the traffic volume of the Mombasa-Nairobi Railway has reached 92%, and the economic benefits are considerable. This type of aid project can not only help developing countries achieve economic development, but also prevent the other party from refusing to repay the loan on the grounds that "there is no money to repay the debt", so as to protect the interests of our country.
This win-win aid model will inject new impetus into the global economy. As China's foreign aid becomes more standardized and diversified, defaults like Tonga's will only be an isolated case and will not trigger a chain reaction.
Let's look forward to more win-win aid programs that will bring more positive changes to the world.