Launched in 2013, the One Belt and One Road initiative is an ambitious infrastructure project to connect more than 100 countries by sea and road to China. After making huge strides, the project, popularly known as the Belt and Road Initiative (BRI), is now losing momentum, study claims. Conducted over a period of four years, the AidData study analyzed 13,427 Chinese projects, which even included those from the pre-BRI era, to reach this conclusion.
Striving for revival The Silk Road, the project is funded by the Asian Infrastructure Investment Bank (AIIB), in which China is the largest participant. AIIB had plans to allocate more 1 trillion yuan ($ 160 billion) for the construction of ports, railway tunnels, dams, skyscrapers, coal-fired power plants and other similar infrastructure projects in low- and middle-income countries (LMICs), while $ 40 billion Silk Road Fund was created to finance the business.
The report also states that through the BRI initiative, China planned to provide resources that were not present within its borders. The loans are secured against future exports of goods that the recipient countries will receive. However, the lending activity was “shrouded in secrecy”. IN BRI Report for 2020, The Council on Foreign Relations (CFR) stated that BRI’s investments require the use of ‘Chinese companies’, which often increase costs; following similar complaints, Malaysia canceled BRI projects worth $ 22 billion in 2018, which include rail and gas pipelines.
AidData reports also say that Chinese state-owned commercial banks have made “bigger tickets” to investments in BRI, and the number of projects they financed has tripled in the first five years of the project. At the end of the receipt, the debt is directed to state-owned companies, banks and even private sector institutions in LMIC, which have some state protection. Although this does not affect the sovereign debt of these countries, 42 LMICs now have a debt exposure that exceeds 10% of their GDP, the report said.
Furthermore, mega projects within the BRI have faced greater resistance than those in which China participated before the BRI. AidData estimates that 35% of projects have faced problems related to corruption, labor violations, environmental violations and even public protests.
Business Insider reported that Kazakhstan and Bolivia have canceled BRI projects worth at least $ 1 billion each, while $ 3.3 billion projects remain suspended or suspended in Costa Rica, Sudan, Ethiopia, Ecuador, Zambia and Cameroon combined.
The BRI project is losing momentum even after China spends about $ 85 billion a year on those projects. AidData points out that this is at least twice as much as the US or other countries spend on foreign projects. The world’s major powers are expected to increase their spending after announcing the “Build a Better World” campaign in June this year, Business Insider reported.