The “road to nowhere” is now heading for a cliff.
China’s famed Belt and Road Initiative (BRI) is teetering on disaster, and could lead to a global domino effect where one country after another gets knocked down by economic failure.
Friend and colleague Chris Snow drew my attention to a podcast from Joe Blogs in which he explored the dangers. Blogs bases his findings on work by AidData, which has released a new, 400-plus page report — Belt and Road Reboot: Beijing’s Bid to De-Risk Its Global Infrastructure Initiative.
The “Belt” refers to the historic overland routes through central Asia that used to link China with the West; “Road” refers to the sea routes of the same period that linked South Asia to the Middle East and Africa.
The BRI is the biggest single overseas investment project that any country has made in the past 20 years. 155 countries have signed up for the program, and they include 75% of the world’s population and more than half of the world’s GDP.
These countries have signed up for Chinese loans to construct massive infrastructure improvements. There has been ongoing concern that they will not be able to pay back the loans, which has consequences, but lately another and more desperate concern has arisen: can China afford to keep the construction going until the projects are finished?
When the BRI was started, bets were made on whether the projects were smart and/or whether they would be profitable.
No one considered the possibility that China would (economically) drive off a cliff.
Now China is having a Black Swan moment — a situation that was completely unforeseen.
China’s own economy is tanking.
Outside investment in China has dropped 95% — a response to China’s clumsy handling of the Covid crises as well as worker riots and the hostility brought on by the war in Ukraine.
CNN Business says “Consumer prices [in China] are falling, a real estate crisis is deepening and exports are in a slump. Unemployment among youth has gotten so bad the government has stopped publishing the data.”