Beijing – China’s Belt and Road Initiative, which aims to build a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes of the Silk Road, has hit a roadblock in seven countries, according to a recent report.
The Gwadar Port in Pakistan’s Baluchistan province is the venue of the $63 billion China-Pakistan Economic Corridor. China is developing Pakistan’s power plants, airports, highways and other infrastructure under the project. Also, Beijing aims to link its landlocked western region to Gwadar, Nikkei reported.
Despite this, some analysts have expressed concerns such as rising trade deficit of Pakistan with China. There are also doubts on how Islamabad will repay off its debt to Beijing. Also, there are worries that the price of such investment can be a huge debt burden.
“The China-Pakistan corridor will no doubt be a game changer for Pakistan, but we need to be careful. Ten years’ tax concessions, 90-year leases for Chinese companies and cheap imports will impact the competitiveness of existing domestic industries,” Nikkei Asian Review quoted Ehsan Malik, the CEO of Pakistan Business Council, a business policy advocacy forum, as saying.
Nikkei Asian Review and The Banker magazine have published a detailed report on the status of the BRI projects in seven countries—Indonesia, Sri Lanka, Kazakhstan, Bangladesh, Poland, Laos and Pakistan. The report also deduces the concerns of these countries ranging from a lack of participation by local workers and banks to unmanageable debts.
In Indonesia, the BRI project has been experiencing serious delays. Construction on a $6 billion railway line is running behind schedule, coupled with rising costs. This has been the same scenario in Kazakhstan and Bangladesh. In terms of deficits, concerns have been raised about owing unmanageable debts to China in Sri Lanka, the Maldives and Laos, along with Pakistan.
Development banks have expressed concerns that the $6 billion rail project will further worsen Laos’ already precarious debt levels, which reached 68% of GDP in 2016, increasing the debt distress level from “moderate” to “high” in the recent World Bank/IMF Debt Sustainability Analysis, according to the report.