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Belt and Road boost sustainable development

2021-03-03 08:28:22 China Daily

This article is to provide a proper perspective of the BRI framework.

Recently, media commentary emerging from European countries suggested that the COVID-19 pandemic has caused a sharp reduction of Chinese investment in economies participating in the Belt and Road Initiative.

Some people continue to express concern over a perceived debt issue, while others sought to highlight that coal-fired power plants are being built under the BRI framework.

To be sure, there are others who have taken cognizance of the new economic development opportunities that the BRI would present now as well as in the future, once the dust of the pandemic settles.

A dispassionate overview of the topic, therefore, would be necessary to gain a proper perspective.

No debt trap for participants

In 2020, China's non-financial direct investment in the countries along the Belt and Road reached $17.79 billion, up more than 18 percent year-on-year.

From 2014 to 2020, China's non-financial direct investment into the countries along the Belt and Road reached $104.72 billion, with the annual average hitting $14.96 billion.

The ratio of China's outbound direct investment in the countries along the Belt and Road also increased to more than 16 percent of the country's total ODI in 2020, from less than 10 percent in 2013, when the BRI was first proposed.

No participating economy that undertook BRI-related construction projects has slipped into a debt crisis. Credit for that should go to the Chinese government's three principles relating to the joint projects:

First, China does not force any country to join the BRI. Nor does China force any participating country to borrow money from itself.

Second, all the investment projects are to be carried out by independent companies, as per the existing market rules, and thus government-to-government lending is rare and based on market mechanisms like international market financing and private-public partnership financing.

Third, all the BRI projects are development-oriented to ensure good returns on investment.

But, some critics are quick to cite the case of the Hambantota Port project in Sri Lanka. Not long ago, a senior Sri Lankan government officer went on record that the country's debt to China constitutes just 12 percent of Sri Lanka's total foreign debt.