The China led development project is helping nations in need of infrastructure funds and compares very favourably with what Western countries and global financial institutions have offered.
Despite being widely acknowledged as a connectivity and infrastructure development project for the past five years, the Belt and Road Initiative (BRI) has come in for criticism by some, with a few even calling it a “debt trap” that China is laying by offering huge loans to countries already under a debt burden.
Some Western think tanks and media outlets with anti-Chinese bias tend to view the BRI as China’s strategy to challenge the existing world order and build a new one led by Beijing. By so doing, they reveal their Cold War mentality. And the zero-sum game they are indulging in is aimed at disrupting China’s peaceful development.
The so-called experts who label the BRI a debt trap should know that countries involved in the initiative carefully check the feasibility of a Belt and Road project, and evaluate its costs, profits and asset-liability ratio before finalising it. They should also know that China helps nations in need of infrastructure funds which some developed countries and international financial organisations refuse to provide because of the slow return on infrastructure projects.
By calling the BRI a “debt trap”, these so-called economic critics have shown they are prejudiced against China. No wonder they portray funds from Western countries as treats and those from China as tricks.
That the BRI has not worsened any country’s debt problems is known to all countries involved in the BRI. For example, Philippine Finance Secretary Carlos Dominguez said on 7 March that Manila’s debt to Beijing is about 1 per cent of its total debt. And “at the end of 2022, the Philippines’ debt to China will be 4.5 per cent of our total debt. The debt to Japan will be 9.5 per cent. Now I don’t know why people are not saying we are going to drown in Japanese debt,” Dominguez said.
Developing countries have been borrowing funds from Western countries and international financial organisations, and many of them have accumulated huge debts because of the long-term and large loans. Some of these countries have eased their debt problems after co-operating and taking loans from China. As a relative newcomer to the international market, China is not a major creditor in the international community, yet it is being accused, albeit without any basis, of laying a “debt trap” for other developing countries.
The Herald newspaper of Zimbabwe dismissed the China “debt-trap diplomacy” theory floated by the West, saying the United States “is in fact the author of the debt traps since the 20th century… the World Bank Group and the International Monetary Fund were mainly instruments to facilitate the reconstruction of Europe after a ruinous world war”.
African countries joined the World Bank, the IMF and other international financial institutions in the hope that they would help them improve their economies, but these organisations failed to do any such thing. “Most countries on the continent, Zimbabwe included, have been caught up in a serious debt trap from which they are still trying to escape.”
China should not take the “debt trap” allegation too seriously, but it should not ignore it either. It should closely scrutinise the funding in BRI countries, enhance communication with them and carefully evaluate their economic capacities before finalising a project.
Also it should explore the possibility of partnering with the US and European countries in third-party markets to promote mutual benefit. And it should enhance co-operation with the World Bank, the IMF, the Asian Development Bank and the Asian Infrastructure Investment Bank, as well as taking measures to make BRI projects more transparent so that other countries do not misunderstand its intentions.
President Xi Jinping said at last year’s Boao Forum for Asia that the BRI is a new product, so it is reasonable to have disputes. Hence, China should expand co-operation in BRI projects. And when co-operation expands, the participants will get a true impression about the Belt and Road Initiative.