The UK edition of The Financial Times cited data compiled by Boston University to show that the total amount of overseas loans to the two policy banks of China (China Development Bank and the Export–Import Bank of China), which had been more than the total amount of debts to the World Bank before 2017, was reduced from USD75 billion in 2016 to USD4 billion last year, which suggests a U-turn done on China’s Belt and Road strategy.

It is reasonable to say China now needs to strengthen its clout through Belt and Road projects in the world more than ever in a bid to contend with US containment policy. While it is easy for the US and European countries, among which similar values, polities and common needs for security are prevailing, to form a natural alliance, it is hardly possible for Beijing, which is constrained by ideologies and systems, to be allied to other countries. Most of its overseas “friends”, not least Belt and Road participants coming for benefits, are utilitarian and pro tem. Once China stops shelling out big bucks, those “friends” would go away. To this end, China has to pay a price for either inviting them to take part in a conference in China for appearance’s sake only or having them vote for China in any international organizations. Yet, to adjust this national strategy at such a critical moment that China needs overseas friends most, Beijing must have a hidden trouble too embarrassing to mention.

The contraction of Belt and Road projects commenced last year, which illustrates that the huge overseas investment and indebtedness had been too much for Beijing to take before the outbreak of Wuhan pneumonia. In recent years, with its unsustainable financial resources and its local governments being debt-ridden, China’s economic growth rate has been much worse than before. Impacted by the coronavirus pandemic, the debts problems of the government and enterprises have been worsening. Last month, bond defaults of Henan Yongmei Group reverberated throughout the country, followed by bond defaults of Brilliance Auto Group, which declared bankruptcy and reorganization later on. Quite a few companies have sought insolvency proceedings for indebtedness as well. All these have shown that China, which has been put out of breath by debts, can spare no strength in taking care of other countries.

Beijing can of course satisfy its own vanity by continuing to shell out big money, but it will definitely inflict deep harm on the domestic economy, and the crisis to be encountered by the regime will come much faster in a much larger scale. Backing down from injecting more funds into Belt and Road projects, Xi Jinping, on the one hand, will have his prestige and credibility ruined; one the other hand, he will have the loss of the investment prevented. Better be bad now than worse later. If Beijing continues with it, it will accumulate even more debts. To take the lesser of two evils, Beijing chose to carry out a sensible act by determinedly giving up the Belt and Road initiative to transfer the resources to research and development of advanced technology and solve the domestic economic problems.

However, this is a lesson paid for with blood! Putting forward the Belt and Road initiative in 2013, Xi Jinping originally intended to exhaust the then excessive productivity and stretch China’s influence across the world. Aggressive and ambitious back then, Xi was convinced that a lot of countries would be drawn to Belt and Road projects by substantial benefits. Admittedly, at the very beginning, with the Silk Road Fund established with a capital of USD100 billion financed by Beijing and the setting up of the Asian Infrastructure Investment Bank, which has 100 member nations now, the momentum of the project was overwhelming. In those years, Xi Jinping hogged the limelight.

Nonetheless, as time went on, the drawbacks of the Belt and Road initiative arose: a lot of countries found the infrastructure projects not capable of ushering in sustainable locomotive power for economic growth but making them debt-ridden. Asian and African countries such as Myanmar, Thailand, Malaysia, Pakistan, the Maldives, Kyrgyzstan and Tanzania called a halt to or modified Belt and Road projects one after another for being inundated with debts or involved in corruption. Obviously, the success in spurring an economy with investment in China is hardly replicated in other countries.

More importantly, the failure of the Belt and Road initiative has presented clearly the shortcomings of the Chinese decision-making model. Under the highly centralized power, while a mandate given by the leader becomes a political mission to be accomplished by officials of various levels, different departments and government organs of different echelons have to surrender money, competent personnel and projects; even Hong Kong has to call into being a steering committee. But such an important national policy is supposed to be studied by different government organs and think tanks before policy options are submitted to the leader for the final call, which can minimize any catastrophe brought about by an erroneous policy. The Belt and Road initiative is destined with the decision-making model of the Chinese Communist Party. From the Great Leap Forward to the Cultural Revolution to the Three Gorges Dam Project, all the decisions were made when the leaders had their heads in the clouds. As reputation of the leaders was everything, they had to bite the bullet and continued with what they had proposed against all odds while justifying their being “mentally sharp in making the decisions”, which gave rise to even more jaw-dropping ramifications.

(Poon Siu To, veteran journalist)

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