Linn Maung
At its height, Beijing’s involvement with the rest of the world was centered on the Belt and Road Initiative (BRI).Observers claim that ten years after its launch, Beijing’s ambitious plan to develop infrastructure links for trade across Eurasia and beyond is losing speed, and many are beginning to doubt the project’s long-term feasibility.Over the course of the decade, “ Beijing went on a lending binge and issued thousands of loans worth nearly a trillion [dollars] for large-scale infrastructure projects spread across 150 countries.”
At the moment, many borrowers are struggling to pay Beijing back for their infrastructure project loans, Only 5% of China’s international lending portfolio in 2010 went toward helping struggling borrowers. This number is currently at 60%.
The most well-known aspect of Chinese President Xi Jinping’s foreign policy was announced in 2013.Chinese President Xi Jinping unveiled his standout foreign policy proposal in 2013, which he previously referred to as the century’s most important initiative. However, the project’s momentum appears to be slowing due to the effects of debt sustainability, the fallout from the coronavirus pandemic, and China’s own economic slowdown.
China has invested $962 billion in the Belt and Road Initiative’s cumulative projects since it began, including $573 billion in construction contracts and $389 billion in non-financial contributions. Beijing is making a strategic pivot in response to a significant difficulty with loan repayment, according to Parks. It is increasing emergency rescue lending while decreasing lending for infrastructure projects.
It is true that emerging countries are currently struggling with debt risks. Although there are many outside variables, it is true that the debt concerns facing developing countries have recently increased dramatically. China claims that they never demand that others borrow money from them, impose political conditions on loan deals, or pursue their own political vested interests. China claims to have always made every effort to lessen the debt burden of emerging nations.
The study claims that China provided 22 nations, including Pakistan, Sri Lanka, and Turkey, with 128 emergency rescue loans totaling $240 billion. Between 2016 and 2021, loans totaling over 80% were provided.But as the report noted, China’s emergency bailouts are not inexpensive.
China is the most straightforward source of assistance for nations that are experiencing financial difficulties and don’t want to immediately accept economic transformation. But as long as debt sustainability remains a lending requirement and there are significant economic and political risks associated with refusing to grant debt relief on par with other creditors, the prolonged debt crisis will teach China a valuable lesson. Beijing ought to have prioritized grants over loans for nations with heavy debt loads.China places a high priority on sustainable debt management and has published guiding guidelines to address the problem in cooperation with developing nations. China’s debt-trap diplomacy ensure first to assist borrowers with loans they cannot repay in order to later wield political influence over countries who are experiencing financial hardship and don’t want to face up to quick economic reform. Beijing declines to provide complete and accurate information about the specific projects it funds. Analysts concur that despite its lending troubles, China would not give up on the massive project because it is vital to Xi’s legacy.
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