Skip to main content

Debts mount for countries that joined China's Belt and Road Initiative


Akanksha Soni

JANUARY 25, 2019 13:21 IST

Pakistan recently cancelled the Rahim Yar Khan power project, which was part of China’s ambitious Belt and Road Initiative(BRI).

With the move, Pakistan joins the growing trend of Asian economies rejecting BRI projects. Chinese funding for BRI projects is at an interest rate that is significantly higher than soft loans from developmental organisations like the World Bank and IMF, and comes with a risk of losing ownership over ports or significant areas, as in the case of Hambantota in Sri Lanka.

Debt spike

A closer look at the timeline of BRI-related events in the second half of 2018 in Asia shows a growing trend of scepticism over China's flagship projects. In July 2018, Mathir Mohamma, the newly elected  Prime Minister of Malaysia, axed two oil and gas pipelines in mainland Malaysia that cost approximately $1bn each, and a $795mn pipeline linking Malacca and Johor. The $20 bn rail link connecting Malaysia’s east coast was also dropped.

The chart below shows the increase in the level of debt as a percentage of GDP after 2016, after BRI projects took off in those countries

A Flourish data visualisation

 

Myanmar in August 2018 announced that it wished to scale down the Kyaukpyu port project from the planned $7.3bn to $1.3bn, citing debt concerns. The project was set up with the aim of supporting existing energy pipelines stretching from Rakhine in Myanmar to Yunan in China.

In Maldives, debt as a percentage of GDP has increased to over 70% after the BRI projects took off. The Centre for Global Development, a think tank based in Washington held that Maldives was one of the countries with a high risk of debt due to BRI projects. These concerns led to speculation that the newly elected President of Maldives was looking at doing away with some of the major BRI projects in the country.

The Rahim Yar Khan project is not the first BRI project to have been cancelled by Pakistan. In 2017, the $14bn Diamer-Bhasha dam project, a major China Pakistan Economic Corridor project under BRI, was cancelled. Since then, Pakistan is one of the countries at high risk of entering a debt trap, according to the Centre for Global Development report.

Dependence on fossil fuels

While debt is a major concern driving the rejection of BRI projects, there is another growing concern over the fact that China is pushing for coal-fired power plants on the global front while going green within its own borders.

Data from Boston University’s Global Development Policy Centre shows how financing for coal and oil projects under the belt and road initiative stands at $44.1bn and $30.8bn respectively, whereas hydropower, wind and solar energy financing stands significantly lower at $12.9bn, $1.7bn and $1.6bn respectively.

The Rahim Yar Khan project for instance, was a coal project that the Pakistan deemed unnecessary due to sufficient power generation in the country.

Not much local employment

Further, the promise of trade and employment seems to have taken a hit, considering the discontent amongst partner countries regarding Beijing’s move of using Chinese workers over locals for the BRI projects. A report released by the United States Institute of Peace in November 2018 highlights the fact that there have been protests and growing unrest in Laos and Indonesia over the employment of Chinese workers in most of the infrastructure and development projects funded by China under the BRI.


https://www.thehindu.com/news/international/china-belt-and-road-initiative-setbacks/article26077964.ece

Comments

Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed.
Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area”
For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number”
Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell you …

The Rise of China-Europe Railways

https://www.csis.org/analysis/rise-china-europe-railways

The Rise of China-Europe RailwaysMarch 6, 2018The Dawn of a New Commercial Era?For over two millennia, technology and politics have shaped trade across the Eurasian supercontinent. The compass and domesticated camels helped the “silk routes” emerge between 200 and 400 CE, and peaceful interactions between the Han and Hellenic empires allowed overland trade to flourish. A major shift occurred in the late fifteenth century, when the invention of large ocean-going vessels and new navigation methods made maritime trade more competitive. Mercantilism and competition among Europe’s colonial powers helped pull commerce to the coastlines. Since then, commerce between Asia and Europe has traveled primarily by sea.1Against this historical backdrop, new railway services between China and Europe have emerged rapidly. Just 10 years ago, regular direct freight services from China to Europe did not exist.2 Today, they connect roughly 35 Chinese…

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میںPlease help the deserving persons...Salary:Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows;Welder: Rs. 1,700 dailyHeavy Duty Driver: Rs. 1,700 dailyMason: Rs. 1,500 dailyHelper: Rs. 850 dailyElectrician: Rs. 1,700 dailySurveyor: Rs. 2,500 dailySecurity Guard: Rs. 1,600 dailyBulldozer operator: Rs. 2,200 dailyConcrete mixer machine operator: Rs. 2,000 dailyRoller operator: Rs. 2,000 dailySteel fixer: Rs. 2,200 dailyIron Shuttering fixer: Rs. 1,800 dailyAccount clerk: Rs. 2,200 dailyCarpenter: Rs. 1,700 dailyLight duty driver: Rs. 1,700 dailyLabour: Rs. 900 dailyPara Engine mechanic: Rs. 1,700 dailyPipe fitter: Rs. 1,700 dailyStorekeeper: Rs. 1,700 dailyOffice boy: Rs. 1,200 dailyExcavator operator: Rs. 2,200 dailyShovel operator: Rs. 2,200 dailyComputer operator: Rs. 2,200 dailySecurity Supervisor: Rs. 2,200 dailyCook for Chinese food: Rs. 2,000 dailyCook…