Is the Belt and Road Project the Answer to China’s Economic Woes?

Map showing Belt and Road initiative. (Image: Xinhua News)
Map showing Belt and Road initiative. (Image: Xinhua News)

China caught the world’s eye with its high-profile global forum on the so-called Belt and Road Initiative in Beijing on May 14-15, 2017. The developmental blueprint, involving about 65 countries, seeks to push through a series of infrastructure and trade projects that boost global economic growth and connect the Asian, African, and European continents.

Chinese President Xi Jinping pledged US$124 billion during the forum to establish China’s leading role in this new globalization effort.

Despite being touted by Chinese news outlets, following the forum, censors began to block Chinese from commenting about the initiative on social media. A number of users had been expressing their skepticism about the gigantic international project at a time when China’s economy is struggling with overcapacity, soaring home prices, and inflated credit.

Skepticism aside, many Chinese bloggers did discuss the initiative in a positive manner. For example, “Lucky Star No. 1”, writing on the online forum Tianya, explained in simple language how China could reset the global economic order and become a boss with the Belt and Road project (also called “One Belt, One Road”):

While many Tianya forum users echoed the above dream of surpassing the U.S. and Europe in the global economic order through the Belt and Road Initiative, some in the comment thread pointed to the unresolved economic situation at home. In the course of writing this post, the comment thread was made inaccessible to unregistered members, in perhaps a sign of how sensitive the topic is.

One person wrote:

Another user commented:

The Chinese government has said it is making advances in restructuring its outdated economic model and reducing overcapacity and leverage for years, but it seems apparent that China’s growth has still been driven by the property market boom.

The Belt and Road Initiative could also complicate Beijing’s effort to stem capital outflow that has been weighing on the economy. Many netizens pointed to an official media outlet’s report written in 2015 that 90 percent of Chinese corporations investing overseas were losing money instead of making profit.

Quoting the report, Twitter user @szeyan1220 believed foreign investment has been exploited by corrupt government officials to transfer huge amounts of their wealth offshore:

The huge investment and the continuous capital outflow will result in inflation, Chinese scholar Zhang Lifan told the U.S. government-funded news outlet Voice of America:

Zhang further clarified on Twitter what he meant by “spending money”:

In fact, the initiative is expected to spend US$5 trillion in the next five years alone, and in Asia, the investment will be up to US$2.5 trillion over the next decade. Yet, by some estimates, over half the countries that have accepted Belt and Road projects have credit ratings below investment grade and the risk for bad debt is huge.

While other countries can easily back down from the initiative, as the leader of the initiative, China will be the last to quit.

This article by Oiwan Lam originally appeared on Global Voices.

[Note: Materials may be edited for content and length.]

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