In a strategic shift, China is overhauling its Belt and Road Initiative, focusing on reducing repayment risks, environmental, social, and governance (ESG) factors, and safeguarding its global reputation, according to a recent report by AidData, a research lab at William & Mary.
The move reflects lessons learned from past investments, making China an adept international crisis manager.
As reported by The Economic Times, The report highlights that more than half of China's loans are now in repayment, but around 19 per cent of borrowers have fallen behind on repayments as of 2021, up from 7 per cent in 2000.
To address this, China is shifting away from infrastructure project lending and increasingly providing emergency rescue lending to ensure borrowers can service their outstanding debts.
Furthermore, China is implementing stricter ESG safeguards, with the risk prevalence rate in its infrastructure project portfolio falling from 63 per cent in 2018 to 33 per cent in 2021.
China's recalibration of the Belt and Road Initiative coincides with increased lending by the US and its allies to compete with Beijing.
In 2021, the US committed $61 billion to low- and middle-income countries.
However, China has slightly reduced its investments in developing nations, committing $79 billion in 2021, down from an average of $117 billion annually between 2013 and 2017.
The report warns that Western nations may not fully understand the recent changes in China's Belt and Road Initiative, potentially leading to competition with a version that no longer exists.
Nayan Dwivedi is Staff Writer at Swarajya.
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