SHANGHAI • China's vast Belt and Road Initiative (BRI) is in danger of losing momentum as opposition in targeted countries rises and debts mount, paving the way for rival schemes to squeeze Beijing out, a new study showed.
President Xi Jinping launched the BRI in 2013 to use China's strengths in financing and infrastructure construction to "build a broad community of shared interests" throughout Asia, Africa and Latin America. But his "project of the century" is now facing major challenges and significant backlash abroad, according to a study published yesterday by AidData, a research laboratory at the College of William and Mary in the United States.
"A growing number of policymakers in low-and middle-income countries are mothballing high-profile BRI projects because of overpricing, corruption and debt sustainability concerns," said Dr Brad Parks, one of the study's authors.
AidData said projects in Malaysia worth US$11.58 billion (S$15.7 billion) have been cancelled from 2013 to this year, with nearly US$1.5 billion cancelled in Kazakhstan and more than a US$1 billion in Bolivia.
China's Foreign Ministry said in a statement that "not all debts are unsustainable", adding that since its launch, the BRI has "consistently upheld principles of shared consultation, shared contributions and shared benefits". Many partner countries say the initiative has made a positive contribution to local economic development, it added.
Mr He Lingxiao, spokesman for the China-led Asian Infrastructure Investment Bank, which is closely linked to the BRI, said: "We believe the overarching principles of the BRI are sound. How these principles will be translated into operational reality is where we advocate for high international standards."
The AidData study looked at 13,427 Chinese-backed projects in 165 countries over 18 years, worth US$843 billion in total, and noted that Beijing's annual international development finance commitments are now double those of the US.
But major changes in public sentiment made it difficult for participating countries to maintain close relations with Beijing, said Dr Parks.
The study said an increasing number of China-backed projects have been suspended or cancelled since the BRI's 2013 launch, with evidence of "buyer's remorse" in countries such as Kazakhstan, Costa Rica and Cameroon.
Credit risks have also increased, with the exposure to Chinese debt now exceeding 10 per cent of gross domestic product in many low-and middle-income countries. The survey found that 35 per cent of BRI projects were struggling with corruption, labour violations, environmental pollution and public protests.
In June this year, the US announced a rival Group of Seven initiative known as Build Back Better World (B3W) to provide financial support for developing nations to build infrastructure.
"B3W is going to increase choice in the infrastructure financing market, which could lead to high-profile BRI defections," said Dr Parks.