As China increases lending to other developing countries, charges that these loans lead to a “debt trap” are growing quickly. Most Chinese lending is for infrastructure and productive investment projects, not donor-determined “policy loans”. Sri Lanka’s later debt crisis has been due to its structural economic weaknesses and foreign debt composition. Even the influential US Foreign Policy journal does not blame Sri Lanka’s undoubted economic difficulties on Chinese debt traps. To set the record straight, there was no debt-for-asset swap after Sri Lanka could no longer service its foreign debt.
