In 2013, Chinese President Xi Jinping launched the Belt and Road Initiative (BRI) to link other countries to China for transactions, directly providing loans and technical services to build infrastructure like rail, roads, ports, and industrial establishments. The plan aimed to influence their customs and policies in China’s interest. However, it was met with resistance from Neighboring countries, which were caught in the trap of being trapped by the BRI.
The BRI has been criticized as a Chinese version of the United States’ “Marshall Plan” for Europe after World War II. After the coronavirus outbreak, China began to tighten its grip on the countries involved in the BRI, leading to rapid debt burdens. The proportion of loans received from China to countries in crisis increased rapidly, and this proportion is set to increase to 60% by 2022. This means that China’s debtor countries are not in a position to repay their loans, resulting in a decline in sugar exports and economic growth rates.
Russia’s war against Ukraine further demoralized countries that took loans from China, leading to inflation and a decline in sugar exports and economic growth rates. Sri Lanka has been unable to pay instalments of Chinese loans on time, forcing it to give its mortgaged Hambantota port to China on a long-term lease. Most projects are ongoing in African countries with Chinese money, but resentment and anger towards China have started increasing in most African countries. Kenya, one such major country, has been or is still being built with Chinese loan money, and the people there are also troubled by the same concern: how will they get rid of the Chinese debt burden?
China’s biggest project in Kenya so far is the railway line connecting Mombasa City and Nairobi, which has cost $5 billion to construct, of which $2 billion has been lost to corruption. The line’s construction cost $5 billion, and trains plying on it are not earning enough to repay the Chinese loan taken for its construction.
There are about 3,500 ongoing projects worldwide under the Chinese BRI. Western observers argue that the Chinese may misjudge the potentially far-reaching consequences of credit sharing, leading to extensions of payment deadlines in 77 countries. Political expediency is often greater than business profit loss, and the risk of bankruptcy for Chinese companies that were to be paid increased. Some Western observers believe that the Chinese are still novices who have not fully understood the intricacies of global trade, while others believe that their political interests are many times greater than business profits and losses.
Western countries have become wary of China’s credibility and commitment to giving loans to Asia, Africa, and Latin America. The US and its fellow G-7 countries have decided to provide $600 billion by 2027 as part of a partnership to build global infrastructure to counter Chinese influence. The new initiative, called the Global Development Initiative (GDI), targets education, clean water, and poverty alleviation in developing countries. China is pressing the World Bank and the Asian Development Bank to join its initiative and provide funds on easy terms. However, Xi Jinping’s BRI plan has proven to be bigotry, as he now wants both China and the World Bank and the Asian Development Bank to lose some money.
