![]() “Now if you fast-forward to today, if the whole purpose of this program is to make money and now you have a lot of deadbeats that are not repaying their dollar-denominated loans, then it probably feels like your strategy is backfiring.” Given the size of the overseas market for infrastructure, the logic went, the BRI would allow China to export this industrial overcapacity while also harnessing its foreign reserves and surplus dollars. Overpumped, the Chinese market became saturated with steel, cement, glass, and aluminum, prompting Beijing to look abroad for answers. “The unintended consequence was that it put China’s domestic industries on steroids.” “The goal was to keep the economy going and keep the economy growing,” she said. Following the 2008 financial crisis, Beijing “freaked out” and funneled vast sums of money into infrastructure development as a domestic stimulus package, said Yun Sun, the director of the China program at the Stimson Center. As Chinese lenders scrambled to administer projects under the BRI umbrella, it became a haphazardly executed mishmash of projects with shoddy lending contracts.īRI was, in large part, a response to China’s own domestic economic challenges, where an excess of domestic production capacity could find no easy outlet, rather than a grand strategy to upend the global order. In practice, the initiative was less streamlined and more opaque. ![]() Once billed as Chinese President Xi Jinping’s “project of the century,” the BRI was unveiled in 2013 as an ambitious infrastructure development campaign that would crisscross some 140 countries. If you want to have your money back, you want to force debt repayment, that basically means you are going to forgo the goodwill.” “I think China literally has to choose which side it wants to let go. “This is a moment where China cannot have its cake and eat it too,” said Zongyuan Zoe Liu, an international political economy expert at the Council on Foreign Relations. That tension, experts say, has left Beijing facing an impossible trade-off: Can it collect its money without hurting its image? It complicates Beijing’s broader aspirations of extending its influence and forging new relationships through economic deals. ![]() Chasing down unpaid debts won’t win many friends. The problem for China is that nobody likes being hounded for money. Now, he said, “the developing world is getting to know China in a very new role-and that new role is as the world’s largest official debt collector.” China has broken a few bones in Sri Lanka, whose financial turmoil allowed Beijing to seize control of a strategic port, and is hassling Pakistan, Zambia, and Suriname for repayment.įor two decades, countries “were getting to know China as the kind of benevolent financier of big-ticket infrastructure,” said Bradley Parks, the executive director of the AidData research group at William & Mary. Eager to recoup its money, Beijing is transitioning from generous investor to tough enforcer-and jeopardizing the very goodwill that it tried to build with initiatives such as the BRI. In the span of a decade, China has emerged as the developing world’s bank of choice, pouring hundreds of billions of dollars in loans into global infrastructure projects as part of its sprawling Belt and Road Initiative (BRI).īut as its borrowers fail to pay up, China is finding that its newfound authority is coming at a price.
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