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China spent twice as much as the US on overseas development, but its Belt and Road Initiative is losing momentum: study

china belt and road
  • China's is spending big on its Belt and Road Initiative, but it's at risk of losing its momentum, a study found.
  • Host nations are canceling or suspending mega projects over concerns about corruption and incurring debt with China.
  • 35% out of all Belt and Road projects were affected by major issues, research lab Aid Data found.
  • See more stories on Insider's business page.

China's Belt and Road Initiative — an ambitious program to build projects in more than 100 countries around the world and grow its global influence — is now being met with opposition from its hosts even as it outspends the US two to one on foreign development, according to a new study.

Host nations are canceling or suspending major projects over fears of corruption, debt, and overpricing, per a report published Wednesday by Aid Data, a US-based research lab from the College of William and Mary.

That's despite China forking out an average $85 billion a year on overseas development, compared to $37 billion from the US, per Aid Data.

The Belt and Road Initiative, announced in 2013 by Chinese leader Xi Jinping, aims to create a new Silk Road across Asia, Europe, Latin America, and Africa by funding railroads, ports, and hospitals in lower- or middle-income countries. Critics say it's often engaging these countries in debt-trap diplomacy, where China extracts political concessions from governments that owe it money.

So far, China has 13,427 projects worth $843 billion across 165 countries, according to Aid Data.

2 22 19 Belt and road map
China wants to rebuild the Silk Road by funding major projects overseas. 
Yutong Yuan/Business Insider

Its development spree was progressing so rapidly that Washington started scrambling to respond in 2019 with its own global push.

But since the initiative started, Malaysia has canceled $11.6 billion worth of infrastructure projects funded by China, according to the researchers. These include a rail link on its eastern coast and two gas pipelines that its then newly-elected prime minister axed in 2018.

Kazakhstan and Bolivia canceled $1.5 billion and $1 billion in projects respectively, while Costa Rica, Sudan, Ethiopia, Ecuador, Zambia, and Cameroon have suspended or canceled a total $3.3 billion in projects.

Part of their apprehension toward China's Belt and Road push is from the steep debt burden they incur by partnering with Beijing; 42 countries have debts to China equal to more than 10% of their GDP, the researchers report.

There are also concerns over corruption. At least 47 projects worth a total $41.2 billion in 10 countries have been flagged with claims of corruption scandals, controversies, or alleged violations, per Aid Data.

The researchers also pointed out that 35% out of all Belt and Road projects were affected by some sort of issue like corruption scandals, labor violations, environmental hazards, and public protests.

They wrote that it's still unclear if "buyer's remorse" among these host countries will affect China's program in the long run.

"However, it is increasingly clear that Beijing will need to address the concerns of host countries in order to sustain support for the Belt and Road Initiative," read the report. 

And the Belt and Road is due to face competition soon. In June, the G7 announced the "Build Back Better World" initiative, which will spend hundreds of billions to develop infrastructure worldwide — a direct challenge to China's billion-dollar push.


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