The Chinese government is leveraging billions of dollars in debts to gain political leverage with developing countries across Asia and the Pacific including Sri Lanka, CNN reported on Wednesday quoting a report.
The independent report, written by a pair of Harvard University scholars, has been presented to the US State Department.
It had identified 16 countries targeted by the Chinese government for "debtbook diplomacy, " with Pakistan, Djibouti and Sri Lanka identified as being most vulnerable.
According to the report, in some cases the huge debts grow to a size too large to pay back, allowing Beijing to leverage the loans to "acquire strategic assets or political influence over debtor nations."
This could allow the Chinese government to extend its influence across the Indian Ocean and the Pacific, encircling India and Australia as well as helping to consolidate its position in the South China Sea, the report said.
In 2017, the unprofitable Sri Lankan port built with billion-dollar loans from Beijing was leased to Chinese state-owned firms for 99 years to help repay the country's debts.
Last month, Australian Prime Minister Malcolm Turnbull said he viewed "with great concern" any foreign military bases being built in the South Pacific, following reports Beijing was in talks with Vanuatu to host Chinese forces.
There is also concern in Washington that China is poised to gain control of a major commercial port in Djibouti, where the US and China have military bases.
A US State Department official told CNN Tuesday it encouraged China to promote and uphold internationally accepted best practices in infrastructure development and funding.