China’s sprawling Belt and Road Initiative has spread development funding around Asia, Africa, and Europe.
But foreign governments have warned the terms of BRI deals could pose risks to the countries signing them.
Now officials in Beijing appear to be acting on their own concerns about unsustainable spending and unwieldy debt.
Since announcing its Belt and Road Initiative five years ago, China has spread billions of dollars around Asia, Africa, and Eastern Europe, supporting a variety of infrastructure projects and stoking concern about Beijing’s growing global sway.
But China appears to be pumping the brakes on lavish BRI-related spending, and it could be a sign it’s worried about the scale of its commitments.
The Chinese government itself does not have a comprehensive picture of the investments involved, and sources close to Chinese economic policymaking told The New York Times in June that Beijing has started a sweeping review to determine the number of deals that have been signed, what their terms are, and with whom they’ve been made.
Official Chinese data also indicates that BRI spending is down, amounting to contracts worth $36.2 billion signed during the first five months of 2018 — 6% less than during the same period in 2017.
Such activity was also down during the first five months of 2017 compared to the same period of 2016, and official figures show that Chinese firms are still finishing projects at close to the same rate that they’re signing onto new ones, indicating the BRI push may just be falling into a more normal rhythm.
Concrete numbers for BRI projects are hard to pin down, according to Jonathan Hillman, a fellow at the Center for International and Strategic Studies in Washington, DC, but the decline reflected in the figures cited by The Times could be driven by several factors emerging both at home and abroad.
‘Mushrooming payments and an unforgiving lender’
While the slowdown may reflect that “the lowest hanging fruit has been picked,” leaving only riskier projects, it could also be caused by “concerns among potential borrowers,” said Hillman, who runs CSIS’ Reconnecting Asia Project.
“Sri Lanka’s experience has become a cautionary tale,” he added, referring to a development deal undertaken with Chinese financing that Colombo struggled to pay back, leading it to offer China a 99-year lease to operate the strategically valuable port of Hambantota.
“In Malaysia, the Maldives, Pakistan, and elsewhere, opposition …read more
Source:: Business Insider