China’s Export of Wealth – Options for India within Hybrid Battle space
Abhishek Das

China’s rapid growth in last couple of decades since Deng Xiaoping started economic reforms in 1978 followed by the restructuring of its economy by Premier Zhu Rongji in 2001 when China joined WTO; helped generate disproportionate amount of wealth for the Chinese State. China has now emerged as second largest economy of the world1behind the US with four of the top ten most competitive financial centers2 and three out of the ten world's largest stock exchanges.3It has become home to the largest companies in the Fortune Global 500 where 124 of them have headquarters in China.4

Most important facet of the Chinese economy is its desire to invest, lend the wealth it generates from the trade or to say “surplus trade”. Except the oil exporting Middle-Eastern Countries; trade surplus is in China’s favour with all of its trade partners.

Its gigantic engagement throughout the globe with countries spanning all five continents is unparalleled in nature which helps China grow in power and prestige. In this brief paper; we shall analyze China’s massive investment globally and how such strength of its economy can be manipulated to create deterrence for Indian State in future conflict with China.

Dragon’s Lust

Under the pretext of “Peaceful Rise”; China fuelled its ambition to reach the global stage; more so under its current paramount Xi Jinping. The Belt and Road Initiative (BRI) as envisaged by Xi Jinping is nothing but agigantic cobweb of roads, railways and ports to connect China with Europe and Africa through Asia. This entire package is considered to be used with all things Chinese; manpower, raw material, technology and above all; the money.

Indian strategist Brahma Chellaney was first to identify this Infrastructural Development Programme as nothing but an attempt by the Chinese state to subvert and coerce the infrastructure developmental requirement of the poor countries which he named as “Debt Trap Diplomacy”.5BRI is therefore, deemed as an imperial outreach of Xi Jinping to attempt for the position of the superpower where China wishes to reach with superior economy and strength.

The mammoth quantum of the investment made by Chinese State controlled institutions can be gazed by using the “The China Global Investment Tracker”6 published by the American Enterprise Institute and The Heritage Foundationin 2020 amounting to “$ 2095.49 Billion” measured since 2005 compared to almost “Zero” couple of decades back. The Dataset as measured below is from the database of “The China Global Investment Tracker” is an attempt to identify the major areas such as Energy, Mining, Transport and Real Estate where the Chinese money got mostly invested or loaned to countries as far as BRI projects are concerned as well as overall Chinese investments are concerned altogether including the BRI investments.

From the above dataset it can be identified that 72.08 Per cent of overall Chinese Overseas Investment and 80.79 Per cent of total BRI investment is covered by the sectors as mentioned in the dataset.

While China’s dominance in world trade is well articulated but its role in global finance is neither documented nor studied mainly due to lack of credible data. However, this path breaking attempt to identify the journey of China’s wealth was made in 2019 by Sebastian Horn, Carmen Reinhart and Christoph Trebesch through their paper published by Kiel Institute for World Economy under the heading of “China’s Overseas Lending”.7

The most intriguing part of the study is that all of China’s investments and loans are controlled by Beijing. Therefore, there is no proper oversight on China’s investments or lending by IMF or other independent bodies like Bank for International Settlements (BIS) or World Bank or Paris Club or OECD.8 Thus it implies that the flow of money is controlled by Beijing and the best we could know about it is sketchy in nature and vague in details. Moreover, as there is no oversight; thus any investment and loan therefore could very well be made to order in nature either for the recipient or from the donor to satisfy and achieve dubious purposes at the same time. Therefore, such investment or loan is either way is a method of exploitation by the creditor towards the debtor.

The Method of Debt Trap and Encapsulation of Wealth

Historically, China has always been a good lender since the inception of the Communist Regime in Beijing and always been keen to use its investments or loans whatsoever to achieve its policy objectives. In last couple of decades; any and every Chinese loan has been marked with its policy objective. According to Andrew Scobell from Rand Corporation such phenomenon is known as “Haiwai Liyi” or “Overseas Interests”. It started with an intention to support brotherly communist regimes in 1950s which was aimed to gain moral high ground over Soviet Union even when its own economy was in shabby state of affair. Such effort gave China a certain degree of competency in the field of investing money or giving loan suitably to further its own political agenda.

With the time; China’s desire to invest or to lend has also evolved in tandem with its growing geopolitical interests coupled with greed for more territory and assets. Flooded with unrestricted Chinese money that might have fuelled the growth in infrastructure, mining, power sectors among the poor and developing countries but the debt of these countries to China steadily rising which is more than 40 per cent of total external debt for the 50 Low Income Developing Countries (LIDC) being the main recipients of Chinese direct lending. The average stock of debt owed to China has also increased for these LID Countries from less than one per cent of GDP in 2005 to more than 15 per cent of debtor country’s GDP in 2017.9

Obviously these countries are the most vulnerable to such huge inflow of money due to unavailability of the infrastructure and competence it requires to control such money. Therefore corruption, misappropriation and embezzlement of funds are normal phenomena. Opacity, high interest rates andmade to order approach by China in lending money lead to widespread corruption resulting default in repaying the loan. Thereby, the Debt Trap sets in.

However, to protect such huge amount of wealth that too in such high risk market, Chinese thinkers have also developed their own ways of asset protection.

China has strategized the circulation of the money it is willing to invest or to loan through its own system which will both serve the purpose of lending as well as the purpose of the security which reduces the risk of default on its loans which is identified as Circular Lending.10 China instead of giving loans to the recipient Governments often disbursed the loans directly to the Chinese contractors involved in that recipient country. China Pakistan Economic Corridor (CPEC) is one such example where mostly Chinese companies are involved in various projects and any other company which wants to join the CPEC project find its way through Chinese companies only. This approach helps China in three ways.

Firstly, the money remains in Chinese financial system; thus it ensures the security of the investment.

Secondly, such circular money lending system ensures the amount of secrecy from disclosing the loans as well as the purpose of the loans which suits Beijing perfectly to advance its policy objectives unhindered.

Thirdly, the money further been secured with the mortgage methodology where China secures its loan with equivalent amount of asset from the debtor country so that in the event of default in loan repayment; it can take control of the asset that’s been mortgaged to China.

Montenegro is one such example where China has given a loan of €800 million to build a highway and provisioned to get the right to access Montenegrin land as collateral if Montenegro fails to repay the debt. Such agreement made by a state only shows its medieval nature of seizing assets of the debtors. Hambantota in Sri Lanka, Mombasa in Kenya and Piraeus in Greece are few examples of Chinese “Debt Trap” policy.

Dragon’s Soft Underbelly and India’s Cross Domain Deterrence

Green Belt and Road Initiative Centre observed a whopping reduction of 54 per cent in Chinese investment in 2020 compared to 2019 for BRI Projects.11 Director General of the Chinese Foreign Ministry's International Economic Affairs Department, Wang Xiaolong said 20 Per cent of the BRI Projects were seriously affected while other 30 to 40 per cent faced with adverse impact.12China's economy shrunk during the pandemic and lending under the BRI has come down from $ 75 Billion in 2016 to just $ 3 Billion in 2020.13Even the Flagship Project of BRI, the CPEC is also not in good shape where only 32 of the total 122 Projects announced under it, could be completed so far.14Global Law Firm “Norton Rose Fulbright” has already predicted the death knell for some BRI Projects.15

Although Chinese economy is returning back into good shape in 2021 but the figures as represented highlight the vulnerability of Chinese economy when it is impacted with trade war with the US, COVID-19 Pandemic, shrinking of global businesses and damaged goodwill.

In today’s hybrid battle-space, any and every opportunity against one’s adversary must be exploited to dominate both the narrative and the battle-space. As far as India is concerned; China’s attitude towards it can best be called unfriendly as far as supporting Pakistan is concerned or grabbing Indian land latest in Eastern Ladakh is concerned which resulted in death of troops from both sides.

Since China has an edge over India both economically and militarily therefore use of non-kinetic alternatives within the Hybrid Battlespace ought to be assessed against Chinese brute power outside the military domain. Since China’s export of wealth is subject to mostly poor and developing countries India could exploit the options it has under existing frameworks with all the recipient countries by reducing the trade, restructuring the aid and curtailing the investment to express the dissatisfaction towards the recipient countries on accepting Chinese loan and investment. However certain options furthermore are available within the Hybrid Battlespace to engage with China to exploit their vulnerabilities within those recipient countries.

Some Options

Engaging the friendly political powers’ both in power and in opposition in recipient countries to highlight the malpractice attached to such strategically aimed loans should be the essential part of countering the influence of Chinese finance. Discouraging the recipient countries by enlighten them on the risk of “Debt Trap” could be another effective option. A strong narrative of negative impacts of such financing is required to be highlighted over the cyber and information space which is indispensible to create awareness of the “Debt Trap”. Such practice will help create positive influence over the civil society of the recipient countries. Reminding the colonial past by comparing Chinese model of business practices will help create desired impact on the civil society to negate the model as a whole within the recipient countries. Awareness among the Domestic Business and Industrial Sector of recipient countries is key to develop objections against inviting Chinese investment which is essentially a controlling tool that results in loss of business for the domestic sectors unquestionably. Bringing the recipient countries within the ambit of India centric Supply Chain Management16 could be helpful to provide opportunities to the domestic business and industrial sectors of the recipient countries which in turn help them to compete against Chinese businesses in their own countries. Using selective conventional and unconventional options to certain degree available under the Hybrid Battlespace to deter the recipient countries from accepting debt trap investments could also be thought of.

Since the capacity gap in military domain exists in terms of quantity, indigenous production capacity and dependency on non-indigenous sources; therefore to counter its power asymmetry against its adversary, India can exploit the options it has in other domains apart from military preparedness, security alliance such as QUAD and domestic industrialization to reduce dependency on non-indigenous sources.

India’s ability to reach the adversary’s soft underbelly to make it vulnerable will undoubtedly add a countable deterrence for both Indian civil and military leaderships in any event of future conflict. If a comprehensive reach of Indian State is established among the countries where China’s interest is vulnerably involved; counterbalance against China could be achieved.

  1. “China is the World’s Second Largest Economy by Nominal GDP” at"World Economic Outlook Database, April 2021". International Monetary Fund. April 2021. Retrieved 8 May 2021.
  2. “China has four out of top ten most competitive financial centers” at
  3. “China has three out of the ten world's largest stock exchanges” at
  4. “China has become home to the largest companies in the Fortune Global 500 where 124 of them having headquarters in China” at
  5. “Debt Trap Diplomacy by Brahma Chellaney” at
  6. The China Global Investment Tracker” at
  7. Sebastian Horn, Carmen Reinhart and Christoph Trebesch: China’s Overseas Lending, Kiel Institute for World Economy, 2019
  8. Ibid, Page 7
  9. Ibid, Page 4
  10. Ibid, Page 8
  11. “54 Per cent reduction in Chinese Investment in 2020 compare to 2019 for BRI Projects” at
  12. “Time of India Report of March 14, 2021 on BRI Projects affected seriously upto 20 Per cent while other 30 to 40 Per cent faced with adverse impact” at
  13. “Business Standard Report of March 14, 2021 on China's economy shrunk during the pandemic and lending under the BRI has come down from $ 75 Billion in 2016 to just $ 3 Billion in 2020” at
  14. “Business Standard Report of March 14, 2021 on Flagship Project of BRI; the CPEC is also not in good shape where only 32 of the total 122 Projects announced under it, could be completed so far” at
  15. “Global Law Firm already predicted the death knell for some BRI Projects” at
  16. Prof Sujit Dutta’s paper “Belt and Road at the Cross-Roads: Imperial Ambitions and blowback”, National Security Vol-IV Issue III (July – September 2021), Vivekananda International Foundation, Page 202

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>

Image Source:


Informative and fantastic read.


Well researched paper Abhishek.


Post new comment

The content of this field is kept private and will not be shown publicly.
5 + 2 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.
Contact Us