File photo of China's flag. Photograph:( Others )
Beijing could now end up becoming a hostage to the loans it is giving out.
The Belt and Road Initiative is a trillion-dollar world domination plan. Since President Xi Jinping's rise to power, China has begun throwing its weight around.
The playbook is the same - infrastructure projects, billion dollars loans, a debt trap, which is designed to expand China's clout as a modern-day colonialist power.
But, all this could backfire. On WION Edit, we'll explore whether a slowing Chinese economy can shoulder the burden of BRI.
Now Xi Jinping has made his intentions clear with the visit to Myanmar. He is not giving up on his vision to re-invent the silk route. In fact, he is doubling down on his commitments. In the first 11 months of last year, Chinese companies signed Belt and Road contracts worth nearly $128 billion. This is a 41 per cent increase from 2018.
There is concern about the Chinese funding for projects around the world, but a more dangerous situation is now developing and Beijing could now end up becoming a hostage to the loans it is giving out. A major source of China's financing has been state-owned policy banks - like the Export-Import Bank of China, and the China Development Bank.
China's state-owned commercial banks have also jumped on BRI projects - the specifics of many deals remains a secret, there is no global scrutiny of the loans that China extends to other nations. This raises serious questions over the scale, and the terms of China's assistance and the massive debt is too hard to ignore.
Last year, China's total debt - this includes corporate, household and government, rose to well over 300 per cent of the GDP.
Sri Lanka had to cough up the Hambantota Port when it failed to meet its payment deadlines, but what would happen if other Belt and Road members too default?
The risk is real and many countries that have enrolled in the BRI are risky investment destinations. Pakistan's economy is in a shambles and political uncertainly always looms large, so there is always a risk of default.
Several others are plagued by corruption, governance issues and more. In Myanmar alone, China's biggest investments projects face the risk of an ethnic war.
The world can no longer afford to ignore the Belt and Road Initiative - it must be brought under a global regulatory system, one that assures stability to the global economy.
BRI touches more than 60 per cent of the world population. China alone cannot be allowed to run the show without submitting itself to scrutiny.
(Disclaimer: WION Edit is the channel's take on the big events of the world)