China’s development finance double US’ but issues threaten belt and road: report

Study of 13,247 global belt and road projects worth US$843 billion over 18 years finds China relied primarily on debt rather than aid in overseas financing

AidData analysis finds recipient nations are concerned about project issues and Chinese debt burdens ‘substantially larger’ than previously understood

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Engineers from China and Tanzania are pictured at the construction site of the Dar es Salaam Port upgrade in Tanzania. A report by AidData says China spent an average US$85.4 billion a year in the five years after the Belt and Road Initiative was launched in 2013. Photo: Xinhua

Published: 12:01pm, 29 Sep 2021Updated: 9:43pm, 29 Sep 2021

China’s development financing has more than doubled that of the United States or any other major power, but if it wants to remain competitive its belt and road projects must address key concerns relating to debt and implementation, a new report said.

The extensive analysis published by AidData, a research lab at William & Mary college, on Wednesday showed that China spent an average US$85.4 billion a year in the five years after the Belt and Road Initiative (BRI) was launched in 2013, far outpacing the US at US$37 billion a year.

This reflected a dramatic expansion in the gap between the world’s largest economies in development finance commitments. They had been at a similar level – around US$32 billion and US$34 billion respectively – in the decade prior.

“Beijing’s international lending programme has soared to record levels because of domestic challenges – specifically, an oversupply of foreign currency, high levels of industrial overproduction and the need to secure national resources that the country lacks in sufficient quantities at home,” it said.

But the report said China would need to address concerns from countries taking part in its belt and road programme, including over implementation issues and Chinese debt burdens that had been “substantially larger” than previously understood. This would be critical, particularly as the belt and road faced more competition in the future. In June, the US and its allies announced their green development alternative, the Build Back Better World (B3W) initiative, at the G7 summit.

China’s belt and road has been a key initiative for Beijing in securing strategic overseas resources and is a pet project for China’s President Xi Jinping, but it has sparked concerns from countries such as the US over debt levels for developing countries and that the programme has allowed Beijing to cultivate greater influence across Asia, Africa, Latin America, Europe and the Middle East.