Growing tensions, lack of tangible results diminish appeal of China's Belt and Road Initiative
May 11, 2023
Beijing [China], May 11 : Growing tensions and lack of tangible results have diminished the appeal of China's Belt and Road Initiative (BRI), according to Khabarhub.
Recent reports suggest that Italy is highly unlikely to renew its expiring BRI deal with China early next year. German Chancellor Olaf Scholz has expressed frustration with the BRI and warned of a looming financial crisis.
The initiative's demise has been sped up due to sanctions against Russia for the invasion of Ukraine and Western backlash against Beijing.
The number of new projects signed under the BRI has declined over the years as Chinese companies are finding it difficult to find willing partners in host countries, according to Khabarhub.
As per the Green Development and Finance Centre of the FISF Fudan University in Shanghai, 14 partner countries saw a 100 per cent drop in BRI engagement in construction and investment in 2022, compared to 2021, including Russia, Angola, Sri Lanka, Nepal and Peru.
Domestically also, the impetus for BRI has weakened. The Chinese economy is facing significant headwinds like contraction in real estate, shrinking population and slowing productivity growth along with an increasingly challenging global geostrategic environment.
China's engagement in Pakistan for the China-Pakistan Economic Corridor (CPEC) dropped by about 34 per cent. Sub-Saharan Africa saw the highest drop in China's engagement in both construction (-44 per cent) and investment (-65 per cent) in 2022 compared to 2021.
West Asia similarly saw significant drops in Chinese engagement. There have been increasing concerns from BRI partner countries over construction flaws in major infrastructure projects like Coca Codo Sinclair Hydroelectric Project in Ecuador and the housing project in Angola.
As per Khabarhub, other concerns include corruption and debt, project cancellations by Chinese companies due to financial problems, steep overvaluation, lack of investment transparency, inferior quality of the infrastructure and unsustainable projects like the Hambantota port and a trade center in Colombo, which are never likely to generate enough returns.
