Xi Jinping, President of China
New Delhi. China’s Belt and Road Initiative (BRI) project has impoverished most of the world’s lower-middle-class countries. While China has invested nearly $1 trillion in an initiative to leverage its financial and political influence with 150 countries. After accepting this plan, the economic situation of low-income countries has become dire and worse. Unlike 150 countries around the world and 32 international organizations, only India stood on the sidelines of Chinese President Xi Jinping’s ambitious BRI project. Signing it clearly meant that India accepted China-Pakistan Economic Corridor (CPEC) projects, especially in Pakistani-occupied Kashmir (PoK). Which was a clear violation of territorial integrity.
In fact, all the countries that signed the China BRI project received high interest rate loans from Xi Jinping for this project. At the same time, many of these conditions were imposed, so that the economic situation of the lower-middle-class countries began to deteriorate and inflation broke their backs. Countries like Sri Lanka, Bangladesh and Pakistan have become completely poor. Because of this, voices are now being raised against this Chinese project in many countries. Bangladesh has clearly portrayed China’s BRI as a major threat to the economic condition of lower-middle-income countries. From the beginning, India has been threatening the world with the loss of the BRI, as well as the loss of economic, security and sovereignty. Today, India’s prediction seems to be coming true. Because of this, this China project is also in danger.
India had strongly opposed the BRI in 2016.
The Narendra Modi government issued a formal statement on the BRI on May 13, 2017, but a year earlier, in March 2016, then-Foreign Secretary Subrahmanyam Jaishankar had said that New Delhi was talking to Beijing about their strategic options on behalf of infrastructure projects. It will not allow hardening. A decade after President Xi launched the BRI project, India’s decision to defend its core interests and have the courage to stand alone has been vindicated to other countries, including the West, under the leadership of the Modi government.
China has imposed a huge debt on low-income countries
Low-income countries owe 37% of China’s debt in 2022. This is 24% of the bilateral debt with the rest of the world. The fact is that 42 countries have actually borrowed more from China through opaque operations by major banks and state-owned companies. According to Indian strategic planners, the loan deals have been deliberately kept out of the public domain. Chinese global projects to finance road, rail, port and land infrastructure have been a major source of debt for participating countries. It is followed by Pakistan with a debt of $77.3 billion, Angola ($36.3 billion), Ethiopia ($7.9 billion). ), Kenya ($7.4 billion) and Sri Lanka $7 billion. The above figure is according to BRI data and compiled by China watchers.
The Maldives and Bangladesh are also severely trapped.
China’s debt to the Maldives rose to $6.39 billion by the end of the first quarter of 2022, according to data from the country’s Ministry of Finance. It accounts for 113% of the Maldives’ GDP, and China finances infrastructure projects such as the Sinamale bridge and a new airport. Bangladesh accounts for 6% of Beijing’s total foreign debt. About $4 billion is pending. Dhaka is now seeking a $4.5 billion package from the IMF. Similarly, after getting caught up in China’s debt, Djibouti gave China a naval base. Angola has the highest payment burden, as the debt represents more than 40% of gross national income (GNI).
Both Laos and the Maldives also owe 30% of China’s GNI in debt, and the new railway line built by China in Laos is already causing economic turmoil in Vientiane. Sri Lanka has already defaulted on sovereign debt, owes 9% of GNI to China, and Africa owes Beijing more than $150 billion, and Zambia has also defaulted on loans, and the country owes it to Chinese banks about $6 billion.
Debt crisis in BRI countries
Although President Xi may be happy to control more than 150 countries through the BRI, the debt crisis in recipient countries could affect China’s own finances. Because he would have to make serious cuts in the debt payments of countries in arrears. The collapse of the real estate market in China last year has already caused stress in the banking system. It is the result of both that China has slowed down its non-financial direct investment in the BRI countries in 2022, which stood at 19.16 billion dollars from January to November. Since 2015, China has signed 50,527 contracts for a total cost of $1 trillion, with an average contract value of $127.16 billion per year. Although Beijing has invested in 150 countries, Singapore, Indonesia, Malaysia, Vietnam, the United Arab Emirates, Pakistan, Serbia, Thailand, Bangladesh, Laos and Cambodia have been frequent recipients.
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