Investments in China's much-touted Belt and Road Initiative (BRI) have fallen by 54 per cent since 2019 and Beijing is no longer doling out hard cash for projects in Africa, amid criticism over infrastructure debt and loan defaults, according to a think-tank report.
The BRI is a multi-billion-dollar initiative launched by Chinese President Xi Jinping when he came to power in 2013. It aims to link Southeast Asia, Central Asia, the Gulf region, Africa and Europe with a network of land and sea routes. Xi launched BRI to undertake big infrastructure projects in the world which in turn would also enhance Beijing's global influence.
According to China-based think-tank Green BRI, which analyses the global infrastructure initiative, belt and road investments last year were at their lowest since the programme was unveiled in 2013.
Beijing's multibillion-dollar BRI has seen its investments in the 138 participating countries slide 54 per cent from 2019 to USD 47 billion last year, it said.
Scuppered deals and the COVID-19 pandemic contributed to the fall, but Beijing has also adopted a more cautious approach to the development of these overseas projects, the Hong Kong-based South China Morning Post reported on Monday.
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China is rebranding its BRI after US President Joe Biden launched the Build Back Better World (B3W) during the June G-7 summit, with the goal of creating "a values-driven, high-standard and transparent infrastructure partnership" to help finance projects in developing countries.
The European Union too has recently launched a USD 340 billion new Global Gateway initiative to compete with the BRI.
Significantly in Africa, where China has expanded its influence with massive investments since 2013, Beijing is no longer providing hard-cash as debt hit Africa battled COVID-19 disruptions, another report in the Post said.
In the last month's 8th Ministerial Forum on China-Africa Cooperation (FOCAC), President Xi offered a slew of incentives, including one billion COVID-19 vaccines, waiver of debt and creation of eight lakh jobs but did not offer big cash incentives like in the past.
At the 2018 FOCAC in Beijing, Xi promised USD15 billion in grants and interest-free loans out of the total USD 60 billion in financing offered by China. This time around, there was none of that, the Post report said.
An official paper on China-Africa cooperation released here said 45 per cent of the RMB 270 billion (around USD 42 billion) China's foreign aid from 2013 to 2018 went to African countries in the form of grants, interest-free loans and concessional loans.
From 2000 to 2020, China helped African countries build more than 13,000 kms of roads and railways, and more than 80 large-scale power facilities, and funded over 130 medical facilities, 45 sports venues and over 170 schools and built the African Union Conference Centre.
Commenting on China's funding in Africa, Paul Nantulya, a research associate at the Africa Centre for Strategic Studies at Washington's National Defence University, said China's direct financing commitments, which had remained at a steady USD 60 billion for the 2015 and 2018 FOCAC summits, were bound to either decline or disappear altogether.
"China has been signalling strongly that it wants to shift towards a private sector-to-private sector financing model, Nantulya said. China's policy banks have grown increasingly concerned about borrowers' ability to repay loans and grown wary about extending finance.
These lenders not only have an obvious financial interest in recovering their money, but they are also part of the Communist Party political architecture in China, Nantulya told the Post.
"Should non-performing loans and defaults continue to increase, Xi could face political consequences at a time when he is consolidating control amid the global pandemic, he said.
China was also reacting to pressure, as African civic groups, trade unions, and environmentalists became increasingly critical of major Chinese-financed infrastructure deals, Nantulya said.
There is also foreign pressure in the form of accusations concerning debt and debt sustainability, he said.
Last month, Xi while addressing a meeting of Chinese officials here cautioned them that the international environment for BRI is getting increasingly complex. He asked them to maintain strategic determination, seize strategic opportunities, actively respond to challenges and move forward.
According to official data, China had invested USD 139.8 billion by 2020 in BRI projects, including USD 22.5 billion last year alone.
This includes the BRI's flagship project the USD 60 billion China-Pakistan Economic Corridor (CPEC) in which Beijing has so far invested over USD 25 billion.
India has protested to China over the 3.000-km long CPEC connecting China's Xinjiang with Pakistan's Gwadar Port as it is being laid through Pakistan Occupied Kashmir (PoK).
Lack of transparency of the BRI agreements and mounting debt to China by smaller countries have raised global concerns.
The 99-year lease of Hambantota port to China by Sri Lanka has raised red flags about the downside of the BRI and Beijing's push for major infrastructure projects costing billions of dollars in small countries.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)