PRC’s One Belt, One Road losing momentum as opposition, debt mount, study says
The People’s Republic of China’s (PRC’s) vast One Belt, One Road (OBOR) scheme is in danger of losing momentum as opposition in targeted countries rises and debts mount, paving the way for rival initiatives to squeeze Beijing out, a new study showed in September 2021.
Chinese Communist Party General Secretary Xi Jinping, pictured, launched OBOR in 2013, aiming to harness the PRC’s financing and construction capacity to “build a broad community of shared interests” throughout the Indo-Pacific, Africa and Latin America.
But Xi’s “project of the century,” which is also known as the Belt and Road Initiative (BRI), is now facing major challenges and significant backlash abroad, according to a study by AidData, a research lab at the College of William and Mary in the United States.
“A growing number of policymakers in low- and middle-income countries are mothballing high profile BRI projects because of overpricing, corruption and debt sustainability concerns,” said Brad Parks, one of the study’s authors.
AidData said U.S. $11.58 billion in projects in Malaysia were canceled from 2013 to 2021, with nearly U.S. $1.5 billion canceled in Kazakhstan and more than U.S. $1 billion in Bolivia.
China’s foreign ministry said in a statement that “not all debts are unsustainable,” adding that since its launch, OBOR had “consistently upheld principles of shared consultation, shared contributions and shared benefits.”
He Lingxiao, spokesperson for the China-led Asian Infrastructure Investment Bank, which is closely linked to OBOR, said “the overarching principles of BRI are sound.”
“How these principles will be translated into operational reality is where we advocate for high international standards,” He said.
The AidData study looked at 13,427 China-backed projects in 165 countries over 18 years, totaling U.S. $843 billion. Major changes in public sentiment make it difficult for participating countries to maintain close relations with Beijing, Parks said.
The study said an increasing number of China-backed projects have been suspended or canceled, with evidence of “buyer’s remorse” in countries as far afield as Kazakhstan, Costa Rica and Cameroon.
Credit risks have also increased, with the exposure to Chinese debt now exceeding 10% of gross domestic product in many low- and middle-income countries.
The survey found that 35% of OBOR projects were struggling with corruption, labor violations, pollution and public protests. In June 2021, the Group of Seven industrial nations, including the U.S., announced the Build Back Better World (B3W) initiative to provide financial support for developing nations to build infrastructure. “B3W is going to increase choice in the infrastructure financing market, which could lead to some high-profile BRI defections,” Parks said.
IMAGE CREDIT: REUTERS