A study says China's main international building project could face failure as debts grow and other countries cool on the plans.
Chinese president Xi Jinping launched the Belt and Road Initiative, or BRI, in 2013. He said the aim of the infrastructure project was to "build a broad community of shared interests" throughout Asia, Africa and Latin America.
But Xi's plan faces major financial difficulties and foreign opposition, says a new report by researchers at the College of William and Mary’s AidData group in the United States.
Brad Parks helped write the report. He says, "A growing number of policymakers in low- and middle-income countries are mothballing high-profile BRI projects because of overpricing, corruption and debt sustainability concerns."
Mothballing means to stop doing something until possibly sometime in the future.
AidData said more than $58.5 billion worth of projects in Malaysia have been cancelled since the BRI launched. The study found a combined loss of more than $2.5 billion worth of projects in Kazakhstan and Bolivia.
China's foreign ministry said in a statement that "not all debts are unsustainable." The ministry also argued that the BRI has always honored the ideas of shared knowledge, shared work and shared results.
The ministry added that many partner countries say the BRI has been helpful for local economic development.
The AidData study looked at 13,427 projects supported by China in 165 countries over 18 years. The projects were worth a total of $843 billion. The researchers also report that China now spends two times the amount of the United States in international development efforts.
But, Brad Parks says, major changes in public feeling about the BRI make it difficult for partner countries to keep close relations with China.
Credit risks have risen along with BRI project cancellations. Chinese debt now exceeds 10 percent of gross domestic product (GDP) in many low- and middle-income countries. The GDP is the total value of a country’s production of goods and services.
The study found that corruption, labor violations, pollution and public protests affect 35 percent of Belt and Road projects.
In June, the United States announced a competing plan known as Build Back Better World, or B3W. The aim of the plan is to provide financial support for developing nations to build infrastructure.
"B3W is going to increase choice in the infrastructure financing market, which could lead to some high-profile BRI defections," Parks said.
I’m Jonathan Evans.
David Stanway reported on this story for the Reuters news service. Jonathan Evans adapted this story for Learning English. Caty Weaver was the editor.
Words in This Story
infrastructure – n. the basic equipment and structures such as roads and bridges that are needed for a country, region, or organization to function properly
high-profile – adj. attracting a lot of attention in newspapers, on television, etc.
sustainability – n. a condition or situation that can continue a long time