Beijing: China is currently the world’s largest debt collector, according to the most recent reports. President Xi Jinping’s major foreign policy initiative is widely regarded as the vast Belt and Road Initiative (BRI), which is now undertaking over 21,000 infrastructural projects. In the previous ten years, Beijing has awarded more than $1.3 trillion (€1.2 trillion), more than the US Marshal Plan did following World War II. Periodically, this enormous loan was provided to promote the development of ports, roadways, bridges, and other infrastructure in developing and underdeveloped nations.
With regard to BRI, it has contributed to the reopening of the historic Silk Route for international trade between China and other nations. Beijing’s financial clout has increased as well, surpassing that of Washington and Brussels. Critics counter that the BRI has burdened developing nations with onerous debt. In this era of climate change, it has also left a tremendous carbon footprint on the planet.
Read More: Italy Announced Withdrawal from China’s Belt & Road Project
Other opponents also propose that China gives the countries contracts for infrastructure projects to be completed by its own companies. These nations eventually become indebted to China as a result. The troublesome day has arrived, as China has opted to invest more in large-scale projects. The reason for this is that the affected countries’ bills from the previous ten years are now past due.
According to AidData figures, 80% of the nations experiencing economic recession have received loans from China. Furthermore, US research indicates that the overall amount of outstanding debt, excluding taxes, has reached a minimum of $1.1 trillion. Nearly 1693 BRI projects are at risk, and 94 projects have already collapsed or been put on hold, according to the report.
The AidData analysis also demonstrates that, because of the recent sharp increase in global interest rates, debtor nations are currently facing enormous payback pressures. Also, the principal repayment periods for nearly all BRI loans have begun. Furthermore, late payers in China now face double interest, ranging from 3% to 8.7%.
Additionally, according to the figures, China lends $80 billion to poor and underdeveloped nations each year, and the US is attempting to catch up. The statistics make it clear that Washington pays more than $60 billion a year on this kind of development financing.
The G7 nations introduced the Build Back Better World (B3W) program two years ago in an effort to rival the Belt and Road Program (BRI). In addition, the European Union hosted its inaugural conference for the Global Gateway initiative last month. In an effort to maintain European influence in the Global South, this is also a competition for the Belt and Road Initiative.
Additionally, during negotiations in Europe, Asia, and Africa, agreements worth €70 billion were signed with governments. The EU’s funding, which could total up to €300 billion, would support initiatives pertaining to transportation corridors, renewable energy sources, and significant raw materials.
The AidData research also discovered that by making loans totaling $84 billion in 2021, the G7 countries exceeded the impressive BRI. Still, the United States and its allies are powerless to undermine Beijing’s dollar-for-dollar strategy. The research also cautioned that as Beijing transitions from massive construction projects to debt collection, the US and its allies should avoid attempting to compete with China’s Belt and Road Initiative.
Lastly, the research predicted that BRI-failed nations like Sri Lanka would eventually reenter the Western orbit. Still, it’s only a prediction, and we’ll see the outcomes soon enough.
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