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Can the Belt and Road become a trap for China? (Nikkei Asian Review)

May 23, 2019

From the article:

"Critics often claim that China is using its massive Belt and Road Initiative as a form of coercive 'debt-trap diplomacy' to exert control over the countries that join the transnational infrastructure investment scheme.

This risk, as Deborah Brautigam of Johns Hopkins University recently noted, is often exaggerated by the media. But, in fact, BRI may hold a different kind of risk -- for China itself.

At the recent BRI summit in Beijing, Chinese President Xi Jinping seemed to acknowledge the 'debt-trap' criticism. In his address, Xi said that 'building high-quality, sustainable, risk-resistant, reasonably priced, and inclusive infrastructure will help countries to utilize fully their resource endowments.'

This is an encouraging signal, as it shows that China has become more aware of the debt implications of BRI. A study by the U.S.-based Center for Global Development concluded that eight of the 63 countries participating in the BRI are at risk of 'debt distress.'

But as John Maynard Keynes memorably put it, 'If you owe your bank a hundred pounds, you have a problem. But if you owe your bank a million pounds, it has.; In the context of the BRI, China may turn out to be the banker who is owed a million pounds.

Critics often claim that China is using its massive Belt and Road Initiative as a form of coercive 'debt-trap diplomacy' to exert control over the countries that join the transnational infrastructure investment scheme."

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Senior Fellow, Director of the US Development Policy Initiative