China’s Vaunted Belt and Road Initiative Is Not Going as Planned

Milton Ezrati October October 26, 2021

China’s leadership in Beijing must feel as though the world of finance has ganged up on them. Especially since they spent so many years sitting atop a rapidly growing economy with strong national finances, recent setbacks must have shocked them.

First came the news that property developer Evergrande could not manage its debt obligations. And with it clear that this matter would not resolve itself and strong signs that Evergrande is not alone, China’s financial system has suddenly come under threat. Now it appears that things are not going as smoothly as expected in China’s Belt and Road Initiative (BRI). Especially because the client states working with China may fail to meet their debt obligations, the project has added considerably to Beijing’s financial headaches.

The BRI was supposed to enhance China’s global influence and stature. Through it, Beijing approached poorer countries with offers to help them realize needed infrastructure projects—roads, bridges, ports, and the like. Beijing offered loans to pay for the work and tied the monies to the use of Chinese firms, mostly state owned, for construction and management once the project was completed. Sometimes the People’s Liberation Army took a role. If for some reason the client state could not meet its financial obligations, the Chinese firms involved in the project would take ownership. Beijing’s foreign minister described the initiative as “the largest international cooperation platform in the world today.” It certainly benefits China, giving Beijing influence elsewhere in the world and Chinese firms profitable deals while getting the client state to pay for it.

Deals grew rapidly after the BRI began in 2013. Today, there are some 13,427 projects, according to research done by a group called AidData at the College of William and Mary. Almost half of these are in Africa, but they also extend through East Asia, Central Asia, and the Middle East. These efforts are supported by the equivalent of $813 billion in loans. Some 400 of these projects, valued at $8.3 billion, involve the Chinese military. For a while it looked as though the initiative would serve its purpose well. It still may, but problems have arisen.

Increasingly, nations invited in by Beijing are balking at the debt involved. Malaysia is a standout, only because Beijing denied that nation trade deals presumably as punishment for refusing a Belt and Road offer. .............To Read More....