Xi's dilemma: Debt cuts at home or sweeter terms to belt and road partners?

Deleveraging at home can be allowed to be a casualty of a global trade war. But leaving marquee Chinese projects stranded overseas? That simply won't do

With China’s fiscal, monetary, currency and credit policies all taking a pro-growth turn, President Xi Jinping’s deleveraging campaign is clearly over. Or, at the very least, it’s going into the freezer for as long as there’s no letup in trade tensions with the US.

But what about Xi’s other pet idea? In Southeast Asia, the ambitious belt-and-road project witnessed a 36 per cent year-on-year decline in investment commitments and construction contracts in the first half. The setback is temporary, according to Citigroup Inc., which expects Beijing will yield to its partners’ concerns for the sake of its “overarching geostrategic imperatives.”