China’s Belt and Road Initiative (BRI) is plunging nations into debt – while estimates of how deeply it existed were inadequate scrutiny of Beijing’s designs rendering it practical. A study by development-research laboratory EdData has now revealed the depth of the problem. According to it, poor nations are troubled by “hidden debt” of $385 billion. Usually, it is kept away from his books, as his borrowings from China are already too much for his own good. Beijing has crafted simple deals made by Chinese businesses and local partners whose burdens are often so opaque that they escape attention. This is worrisome.
China is investing in the infrastructure of more than 160 countries. Many of these, some of them in Africa, have poor financial health and are at risk of falling into a debt trap. This, many suspect, is actually Beijing’s plan to take advantage of which it can leverage on its policies. Nations observing it will hardly be able to resist its geo-strategic demands. The Blue Dot network formed by the US, Japan and Australia was intended to counter China’s BRI. But it is not yet clear how effective this option will prove to be. For now, BRI countries should tread carefully.
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