Semafor Signals
Is China’s Belt and Road Initiative losing its appeal?
The News
Dignitaries from over 140 countries across the Global South, the Middle East, and notably Russia, have gathered in Beijing for the 10th anniversary of China’s Belt and Road Initiative (BRI).
The forum, described by Chinese state media as the “most important diplomatic event” of the year, is seen as an opportunity for Xi Jinping to showcase his foreign policy and preview ambitious plans as Beijing positions itself as an alternative global power to the West.
In a white paper outlining new BRI strategies Tuesday, Chinese officials wrote of broadening global cooperation and noted that Beijing will support “any initiative that can genuinely help developing countries build infrastructure and achieve shared progress”.
But data shows that BRI activity is slowing down amid concerns that investments have amounted to “debt traps” in poor countries and large-scale future investments look uncertain given China’s own flailing economy.
SIGNALS
Analysts told Nikkei that BRI may be losing its appeal, given the lower attendance at this year’s gathering compared to the last two summits. The number of BRI-participating countries that suffered from debt distress has doubled in the past eight years, a researcher said, citing the IMF. Projects in Zambia, Sri Lanka, and Pakistan have either defaulted or at risk of doing so, and a third of all BRI projects have been hampered by environmental damage, corruption, and labor violations, researchers found. The scale of construction projects in China has also shrunk over the years, according to one study, as the country grapples with its own economic slowdown, Nikkei reports.
Observers are closely watching how China continues to cooperate with African countries on infrastructure projects. In 2022, Beijing issued its lowest level of loans to African governments since it began lending to the continent in 2004. Securing huge loans from China will be a “longshot” China Africa Project’s Eric Olander argues, given the current state of its politics and economy. China, however, might consider renegotiating terms with countries that could fall into the debt trap. For instance, it has already suspended Ethiopia’s debt repayment. According to Boston University’s Global China Initiative, financial help might mean “more loans with smaller values under $50 million” and loans with more social and environmental benefits.
