Belt and Road Initiative (BRI): Challenges and future prospects - Hindustan Times
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Belt and Road Initiative (BRI): Challenges and future prospects

ByHindustan Times
Apr 29, 2023 12:46 PM IST

The article is authored by Ananya Raj Kakoti and Gunwant Singh, scholar, international relations, Jawaharlal Nehru University.

The Belt and Road Initiative (BRI) is a large-scale infrastructure development programme launched by China in 2013. The initiative aims to connect Asia with Europe and Africa, through a network of railways, highways, ports, airports, and other infrastructure projects with the intent to promote trade, investment, and economic growth in participating countries. Hence, this has been described by Chinese officials as a "new model of globalisation" that benefits all parties involved.

In this file photo, visitors walk past a wall with a map showing the Belt and Road Initiative (BRI) countries, at an exhibition in Beijing, China.
In this file photo, visitors walk past a wall with a map showing the Belt and Road Initiative (BRI) countries, at an exhibition in Beijing, China.

 

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The BRI comprises two main components: The Silk Road Economic Belt and the 21st century Maritime Silk Road. The Silk Road Economic Belt focuses on improving connectivity and cooperation between China and countries in Central Asia, Europe, and West Asia, while the 21st century Maritime Silk Road focuses on strengthening maritime cooperation between China and countries in Southeast Asia, South Asia, and Africa

 

In recent years, the BRI has attracted significant attention and investment intending to promote regional connectivity and integration and support economic growth in participating countries. However, the initiative has also faced several challenges, including concerns about debt sustainability and the impact of China's economic slowdown.

 

The Chinese economy has experienced a slowdown in recent years, with declining growth rates and mounting debt levels, which has raised questions about the sustainability of the BRI, and the ability of China to continue investing in large-scale infrastructure projects.

 

The economic slowdown has led to increased scrutiny of China's overseas investments, including those under the BRI, which has affected the pace of BRI projects. Some projects have been delayed or put on hold, and China has become more cautious about taking on new investments. Critics have raised concerns about not just the financial sustainability of the projects, but also the social and environmental impact of the infrastructure projects. This has made it more difficult for China to gain the support and cooperation of host countries, which is crucial for the success of the BRI.

 

Looking ahead, the impact of China's economic slowdown on the BRI will depend on several factors, including the pace of China's economic recovery, the level of debt sustainability of BRI projects, and the geopolitical context in which the initiative operates. While the BRI may face challenges in the short-term, it is likely to remain a key component of China's long-term economic and foreign policy objectives.

 

One of the most significant criticisms of the BRI is that it is a debt trap, which involves China lending money to developing countries for infrastructure projects that they cannot afford to repay. Critics argue that this leads to countries becoming trapped in a cycle of debt and dependence on China, which can undermine their sovereignty and increase their vulnerability to economic and political pressure from China.

 

There are several examples of countries that have experienced debt issues as a result of BRI projects. Sri Lanka, for example, was unable to repay its debt for the Hambantota Port project and was forced to hand over control of the port to China on a 99-year lease. Djibouti's struggle to repay Chinese loans has also generated criticism on the Chinese model of project financing for creating debt traps for developing countries. Pakistan's debt to China has also been growing, with concerns raised about the financial sustainability of the projects and their impact on Pakistan's economy with China investing billions of dollars in infrastructure projects under the China-Pakistan Economic Corridor (CPEC), a key component of the BRI. China has invested heavily in infrastructure projects in Laos, however, the project has been criticised for its high cost and potential impact on the environment, and concerns have been raised about Laos' ability to repay the loans from China. These are just a few of many such cases.
 

However, proponents of the BRI argue that it is not a debt trap and that the initiative provides much-needed investment and infrastructure for developing countries. They argue that the benefits of BRI projects will outweigh the costs in the long term and that China is willing to work with participating countries to ensure that projects are financially sustainable.

 

Debt relief measures have been proposed as a way to alleviate the debt burden of countries participating in the BRI. These measures include debt restructuring, debt forgiveness, and debt-for-equity swaps, among others. The aim is to help countries manage their debt obligations and avoid default, while also supporting the sustainability of the BRI. In 2018, China announced that it would cancel or reduce the debts of some BRI countries, particularly those that are classified as Least Developed Countries. China has also participated in debt relief initiatives such as the Debt Service Suspension Initiative (DSSI) launched by the G20 in response to the Covid-19 pandemic.

 

Despite these measures, concerns about debt sustainability for BRI projects remain. Critics argue that China's measures are insufficient and that more needs to be done to ensure that BRI projects are financially sustainable and do not lead to countries becoming trapped in debt.

 

Looking ahead, the future of the BRI will depend on China's ability to address the challenges and concerns raised by participating countries and to adapt to changing global conditions To ensure the long-term sustainability and success of the BRI, China may need to focus on promoting greater transparency and sustainability in BRI projects and work collaboratively with participating countries to address debt sustainability concerns.

 

Moreover, the emergence of alternative initiatives and partnerships, such as the G20’s Infrastructure Initiative, G7’s Partnership for Global Infrastructure and Investment (PGII) and the EU's Global Gateway Plan, could also shape the future of infrastructure development in developing countries.

 

The BRI faces significant challenges, including concerns about debt sustainability and the impact of China's economic slowdown. However, with measures such as debt relief and restructuring options, and a focus on greater transparency and sustainability, the BRI has the potential to continue bringing significant benefits to many countries. The future of the BRI will depend on China's ability to address these challenges, and to work collaboratively with participating countries and other partners to promote sustainable and high-quality infrastructure investments that benefit all parties involved.

 

The article is authored by Ananya Raj Kakoti and Gunwant Singh, scholar, international relations, Jawaharlal Nehru University.

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