New Delhi: Sri Lanka is in the midst of the worst economic crisis in modern history, while Pakistan’s economy is also on the verge of collapse.
A common factor for both countries—China has enormous debts that both are struggling to service, and are sinking deep into an economic chasm.
And yet, China refuses to believe that it is responsible, even partially, for the two South Asian nations’ woes, or that its mega-infrastructure projects look to a bleak future.
Belt and Road Initiative of $147 billion (briKnown to be the brainchild of Chinese President Xi Jinping, countries from Asia to Africa are mired in debt, unable to complete projects and unable or refusing to pay debts, As many reports have quoted well established think tanks.
The $60-billion China Pakistan Economic Corridor (CPEC), which Beijing has touted as a “game changer” for Pakistan, is turning into a white elephant, and Islamabad is plagued by an ever-increasing debt burden.
Countries like Pakistan and Sri Lanka, which are facing an acute foreign exchange crisis, are converting Chinese project loans into balance of payments to deal with immediate economic problems.
Sri Lanka has already defaulted on $51 billion in debt, including loans to China, while Pakistan is on the verge of a financial crisis. Islamabad is dependent on International Monetary Fund (IMF) bailouts to avoid being in an economic situation like Sri Lanka.
Refuting reports that the BRI is in financial trouble, Chinese Foreign Ministry spokesman Wang Wenbin told the media that as of July, China has signed BRI documents with 149 countries and 32 international organisations.
According to a Bloomberg report, China has extended about $26 billion in short and medium-term loans to Pakistan and Sri Lanka over the past five years, as its foreign debt shifted from infrastructure to providing emergency relief.
China’s $900 billion BRI debt has changed since 2018 aimed at bridging the foreign exchange deficit, according to data compiled by EdData.
A recent report released by the Center for Green Finance and Development at Fudan University in China noted that many countries have seen a 100 percent drop in BRI engagement.
Another report by Japanese media outlet Nikkei said that as financial concerns about China’s BRI initiative grow, many countries are reducing or abandoning projects that are part of the BRI.
Asked for his reaction to these reports, Wang pointed to BRI’s success stories such as the China-Laos Railway, the bridge in Serbia and the port of Gwadar in Pakistan.
“These projects have been implemented well. The China-Europe Railway is running smoothly. China’s trade with countries on this route reached $9.3 billion in the first half of this year.
(with PTI inputs)
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