The Infrastructure Trap: Chinese Loan Diplomacy and Sovereign Vulnerability in Developing States

Lorenzo Monsante, Louis Niang, Aman Gulshan Budhiraja

China’s Belt and Road Initiative (BRI) has transformed infrastructure financing across the developing world, while also provoking claims of “debt-trap diplomacy.” This article argues that such claims oversimplify the dynamics of China-led development finance. Rather than deliberate asset seizure, debt-driven dependency emerges from the interaction between China’s strategic objectives and the domestic political and economic vulnerabilities of recipient states. The main body of the article examines this dynamic through case studies of Sri Lanka’s Hambantota Port and the Lao–China Railway, illustrating how high-risk borrowing, weak fiscal conditions, and opaque financing amplify China’s leverage. The article then turns to future outlooks and current cases in Peru and Kenya, showing how dependency can also arise through sectoral investment, ownership structures, and debt pressure without formal asset transfer. Together, these cases highlight the structural roots of China’s growing influence in developing countries.