A Decade of China’s Belt and Road Initiative – Thailand Business News

As the Belt and Road Initiative (BRI) celebrates its 10th anniversary, concerns are rising about the true benefits of China’s infrastructure program.

The BRI has left many participating countries burdened with extreme public debt, leading to bankruptcy and default. China’s lending practises, which often involve commercial rates and hidden debts, have contributed to this situation.

Key Takeaways

• The BRI has been described as the largest and most ambitious international cooperation initiative in history, with an estimated investment of over $1 trillion and involving more than 140 countries.
• Thailand’s approach was, from the start, very different from that of other countries directly associated with the BRI, relying essentially on internal financing through fundraising.

• The Belt and Road Initiative (BRI) has led to unsustainable levels of debt for participating countries, resulting in bankruptcies and defaults.
• The BRI has allowed China to exert global pressure, undermine democracy, and distort multilateral institutions, raising concerns about the true intentions and impacts of the initiative.

Furthermore, reports of failing and wasteful infrastructure funded by the BRI have emerged, exposing corruption and bribery. The BRI has also been used as a tool for China to exert pressure, undermine democracy, and spread propaganda. As the celebrations continue, attending countries should question whether their citizens truly benefit from the so-called “win-win” cooperation with China.

Thailand’s approach was from the start very different from other countries directly associated with the BRI, relying essentially on internal financing through fundraising through (Thailand Future Fund Infrastructure Fund  – TFFIF – by appealing to local investors).

The goal of the fund, which has already raised $1.4 billion, is to invest in long-term projects, including highways or toll roads, railways , electricity generation and distribution , airports and deep water ports.

The government is currently preparing to market a second tranche of the TFFIF which will this time be open to foreign investors and which will be specifically intended for the financing needs of public companies .

$1 trillion investment involving more than 140 countries

The Belt and Road Initiative (BRI) is a global development strategy launched by China in 2013, aiming to connect Asia, Europe, Africa and beyond through a network of infrastructure projects, trade agreements and cultural exchanges.

The BRI has achieved remarkable progress in the past decade, delivering tangible benefits to the participating countries and regions. According to a report by the World Bank, the BRI could reduce travel times along economic corridors by 12%, increase trade by 2.8% to 9.7%, increase income by up to 3.4% and lift 7.6 million people from extreme poverty.

But the initial decade of the Belt and Road Initiative (BRI) did not necessarily result in sustainable growth for the participating countries. Pakistan, a major recipient of BRI funding, is projected to have lower economic output this year compared to 2018 according to the International Monetary Fund. Similarly, Kazakhstan, where the BRI was first announced by Xi in 2013, has not yet reached the gross domestic product level it achieved that year.

The BRI also faces many challenges and criticisms, such as debt sustainability, environmental and social impacts, governance and transparency issues, geopolitical risks and security threats. Some countries have expressed concerns about China’s intentions and influence behind the BRI, accusing it of pursuing a “debt-trap diplomacy” or a “new colonialism”.

China has repeatedly denied these allegations, stressing that the BRI is based on the principles of mutual respect, consultation, cooperation and shared benefits.

Hidden debt and forced bankrupcy

China ‘s colossal $385 billion debt owed by more than 40 countries goes unaccounted for by the World Bank and IMF thanks to the way Chinese loans are structured, according to the Global Chinese Official Finance Dataset report.

The report also notes that a large part of the financing of investments under the “ Belt and Road ” program consists of loans granted at a high price: loans from Beijing to Pakistan, for example, are granted on average at 3.76%. interest, while Western banks offer 1.1%.

The increasing public debt has become a major concern for struggling nations, as it poses a significant threat to their financial stability and may push them towards bankruptcy. Unlike Western lenders, who often provide direct aid or subsidized loans, China has lent $1 trillion (€948 billion) to cash-strapped nations at commercial rates.

Laos is currently experiencing an ongoing economic crisis, with a significant amount of public and publicly guaranteed debt amounting to 123% of its gross domestic product. The majority of this debt is owed to China, raising concerns about the level of influence Beijing may have over the country as it struggles to manage its financial obligations.

However, there may be more hidden debt that is not accounted for, as a 2021 study has suggested that up to half of BRI loans are not included in official statistics. This lack of transparency has resulted in the impact being felt by nations such as Zambia and Sri Lanka, who have been forced into bankruptcy and default.

As the BRI enters its second decade, it is expected to adapt to the changing global circumstances and address the existing problems. China has pledged to uphold high standards of quality, sustainability and inclusiveness in the BRI projects, and to promote green development, digital cooperation and people-to-people exchanges.

China has expressed its desire for increased dialogue and cooperation with other major powers and international organizations, including the US, the EU, and the UN. This is aimed at fostering mutual trust and complementarity between nations.