China's BRI Isn't Quite As Lucrative As Often Advertised: Report
Colombo: Easy Chinese investment poured into BRI projects abroad isn't quite as lucrative as often publicized and sparsely generates sufficient revenue to justify the cost, according to Stockholm-based non-profit and non-partisan research and policy organization.
Writing for the International Security and Geopolitics Analyst and Strategic, Asanga Abeyagoonasekera contended that several of the would-be BRI beneficiaries have found themselves forced to transfer resources to service their debt.
Citing the example of Sri Lanka, Abeyagoonasekera said it's a timely warning for many other nations in BRI with largely unsustainable borrowing and China as their major creditor.
"Field research in Sri Lanka in 2021 made it clear that China has effectively laid two traps in the country, the classic debt trap and a strategic trap," he said.
Arguing that the former president Gotabaya Rajapaksa, who fled public anger to the safety abroad, contributed to the latter trap, the researcher said several other South Asian nations follow the same trajectory, with heavy borrowings and supporting China's policies.
Whether the World Bank (WB), International Monetary Fund (IMF), or the United States of America, (USA) like it or not, today China is the world's largest official creditor. Beijing is walking the distance where needed donning the mantle of the Modern-Day Good Samaritan.
AidData, a US Research Lab, confirmed what has been heard in whispers at the UN corridors that China's annual international development finance commitments exceed that of "the US and other major powers on a 2-1 basis or more," London-based consultant, James Crickton stated.
China is saddling low-income countries with loans and is forcing them to make strategic concessions when they are unable to repay, say these critics, whose number is swelling in the wake of Sri Lanka's nightmares with debt.
The new Silk Road as the Belt Road Initiative is described, is China's geopolitical and geo-economic strategy to expand its dominance worldwide and this strategy is only plausible when the ratio of economic strength is much higher compared to other nations as leverage, Crickton said.
Abeyagoonasekera pointed out that Sri Lanka is just one among many other developing countries where, between 2000-2017, debt to China increased tenfold, from USD 500 billion to over USD 5 trillion.
"If more nations like Sri Lanka default, China would have to inculcate this extra burden and re-evaluate its BRI strategy. The consequences of such a shift could redefine the future of BRI," he adds.
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