Announced in 2013, the One Belt and One Road initiative is an ambitious infrastructure project aimed at connecting more than 100 countries via a sea route and a route to China. After taking giant strides, the project, popularly known as the Belt and Road Initiative (BRI), is now losing momentum, a study affirmed. Spanning a four-year period, the AidData study analyzed 13,427 Chinese projects that even included those from the pre-BIS era to come to this conclusion.
Aiming to revive the Silk Road, the project is funded by the Asian Infrastructure Investment Bank (AIIB), of which China is the main player. The AIIB intended to allocate more than 1000 billion yuan (160 billion dollars) build ports, rail tunnels, dams, skyscrapers, coal-fired power plants and other infrastructure projects in low and middle income countries (LMICs) while $ 40 billion Silk Road Fund was created to finance businesses.
The report also states that through the BRI initiative, China planned to secure resources that were not present within its borders. The loans are guaranteed against future exports of raw materials that the recipient countries will make. However, the lending activity has been “shrouded in secrecy”. In a BIS Report 2020, the Council on Foreign Relations (CFR) said the BIS investments required recourse to “Chinese companies” which often inflated costs; Following such complaints, Malaysia canceled $ 22 billion worth of BRI projects in 2018, which included a rail link and gas pipelines.
AidData reports also indicate that Chinese state-owned commercial banks have made “larger” investments in the BRI and that the number of projects funded by them tripled in the first five years of the project. On the receiving side, debt is channeled to SOEs, banks and even private sector institutions in LMICs that enjoy some government protection. While this does not reflect the sovereign debt of these countries, 42 LMICs now have debt that exceeds 10% of their GDP, according to the report.
In addition, megaprojects under the BRI have encountered more opposition than those in which China participated before the BRI. AidData suggests that 35 percent of projects faced issues related to corruption, labor violations, environmental violations, and even public protests.
Business intern reported that Kazakhstan and Bolivia have canceled BRI projects worth at least $ 1 billion each, while $ 3.3 billion of projects remain on hold or are canceled in Costa Rica, Sudan, Ethiopia, Ecuador, Zambia and Cameroon combined.
The BRI project is losing momentum even after China has spent around $ 85 billion a year on these projects. AidData says it’s at least twice as much as the United States or other countries spend on overseas projects. Major world powers are expected to increase spending after announcing the “Build a Better World” campaign in June this year, Business Insider reported.