Workers prepare reinforcing steel at the One Galle Face project developed by China Harbour Engineering, a unit of China Communications Construction, in Colombo, Sri Lanka, on March 31, 2018.
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At its peak, China’s Belt and Road Initiative was seen as the centerpiece of Beijing’s engagement with the world.
Now, a decade after its rollout, observers say the ambitious strategy to build infrastructure trade links across Eurasia and beyond is losing steam, with some questioning the ongoing viability of Beijing’s mega-project.
“Beijing went on a lending spree and issued thousands of loans worth nearly a trillion [dollars] for big-ticket infrastructure projects spread across 150 countries” over the decade, said Bradley Parks, executive director of AidData, a research group at the College of William and Mary in Virginia.
“Now, many borrowers are having difficulty repaying their infrastructure project debts to Beijing,” according to Parks. “In 2010, only 5% of China’s overseas lending portfolio supported borrowers in financial distress. Today, that figure stands at 60%,” he told CNBC.
Chinese President Xi Jinping announced his signature foreign policy idea in 2013 — which he once called the “project of the century.”
Xue Gong, a nonresident scholar at Carnegie China, in March noted the momentum behind the project “appears to be slowing thanks to the repercussions of debt sustainability, the coronavirus pandemic fallout, and China’s own economic slowdown.”
Since it started, China’s cumulative Belt and Road projects have totaled $962 billion — including $573 billion in construction contracts and $389 billion in non-financial investments, according to a report by Fudan University in Shanghai.
“Beijing faces a major loan repayment challenge, and it’s responding with a strategic pivot,” said Parks. “It’s ramping down infrastructure project lending and ramping up emergency rescue lending.”
China’s embassy in Singapore told CNBC that “it is true that the debt…
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