Announced in 2013, the One Belt and One Road Initiative is an ambitious infrastructure project to link over 100 countries via a maritime and a road route to China. After making giant strides, the project, popularly known as the Belt and Road Initiative (BRI) is now losing momentum, a study has claimed. Carried over a period of four years, the study by AidData analyzed 13,427 Chinese projects that even included those of the pre-BRI era to come to this conclusion.
Aiming to revive the Silk Route, the project is financed by the Asian Infrastructure Investment Bank (AIIB) in which China is the largest stakeholder. The AIIB had plans to allocate over 1 trillion yuan ($160 billion) to build ports, railroad tunnels, dams, skyscrapers, coal-fired powerplants, and other such infrastructure projects in low and middle-income countries (LMICs) while a $40 billion Silk Road Fund was created to finance businesses.
The report also states that through the BRI initiative, China had planned to secure resources that weren't present within its borders. The loans are collateralized against future commodity exports that the recipient countries will make. However, the lending activity was "shrouded in secrecy." In a 2020 report on the BRI, the Council on Foreign Relations (CFR) said that the BRI investments required the use of 'Chinese firms' that often inflated costs; following such complaints, Malaysia canceled $22 billion worth of BRI projects in 2018 which included a rail-link and gas pipelines.
The AidData reports also state that China's state-owned commercial banks have made 'bigger ticket' investments in the BRI, and the number of projects financed by them has tripled in the first five years of the project. On the receiving end, the debt is directed to state-owned companies, banks, and even private-sector institutions in LMICs that have some government protection. While this does not reflect on the sovereign debt of these countries, 42 LMICs now have a debt exposure that exceeds 10 percent of their GDP, the report said.
Additionally, mega projects under the BRI have faced more opposition than the ones China has participated in pre-BRI. AidData suggests that 35 percent of the projects have faced issues related to corruption, labor violations, environmental violations, and even public protests.
Business Insider reported that Kazakhstan and Bolivia have canceled BRI projects worth at least one billion dollars each, while $3.3 billion worth of projects remain suspended or stand canceled in Costa Rica, Sudan, Ethiopia, Ecuador, Zambia, and Cameroon combined.
The BRI project is losing momentum even after China spends roughly $85 billion a year on these projects. AidData states that it is at least twice as much as the U.S. or other countries spend on overseas projects. Major global powers are expected to increase their spending after announcing the 'Build Back Better World' campaign in June this year, Business Insider reported.