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Belt and Road: Are Wheels of China's Megaproject coming?



In a statement issued on Friday, the Chinese Foreign Ministry dismissed numerous reports as "false" stating that a major port in Mombasa could be in danger of being seized by Beijing on unpaid debts.
Last week, Kenyan President Uhuru Kenyatta spoke with journalists and dismissed the reports as "pure propaganda" based on a leaked letter from the country's Auditor General, containing assets from the Kenyan Port Authority (including Mombasa's massive Kilindini Port ), the largest port in East Africa, was listed as collateral for a multi-billion dollar loan to finance a rail project.
"The Chinese government itself says that this is nonsense," said Kenyatta, while the AG's office refused to publish such a letter, the copies of which were distributed on the Internet.
Despite vehemently rejecting Beijing and Nairobi, concerns over lending in many developing countries are fueling the growing fear that their governments have overtaxed the Chinese Belt and Road Initiative (BRI) with the Chinese state-owned enterprises Debtors should fail to bring together ports, railways and other important infrastructure around the world.

Five years after the BRI's inauguration, Beijing's luster is also set against a background of ongoing – if temporarily interrupted – trade war with the US and concerns about future funding and a return to an increasingly cumbersome list of overseas investment ,

Debt Fears

For BRI critics, the port of Hambantota in Sri Lanka is a perfect example of the risks that developing countries are taking on their Chinese loans.

In December 2017, Beijing acquired a 99-year lease for the port, which is strategically located on the Indian Ocean. For this he forgave a few billion dollars, which owed the South Asian country China.

The move sparked fears that China would use similar failures in other countries to acquire a variety of new infrastructures that could bring both economic and military benefits – and competition in the region such as India and the US to skip.

In mid-2018, the Zambian government was forced to decline reports that were preparing to hand over control of several public assets, including the state broadcaster and Kenneth Kaunda International Airport of Lusaka, to China.
  Kenyan President Uhuru Kenyatta (left) shakes Chinese President Xi Jinping during the welcome ceremony for the Belt and Road Forum near Beijing in May 2017.
Kenya's own editions date to 2014, when Nairobi signed a billion-dollar contract with the state. owned the China Road and Bridge Corporation to finance a new rail connection between the Kenyan capital and Mombasa on the Indian Ocean.
The railway line known in Kenya as the SGR project (standard gauge railway) was completed in 2017 and shortens the transport times between the two largest cities in the country. The Kenyan government has allegedly borrowed another $ 1.6 billion from China to fund a line from Nairobi to Naivasha.
But while the SGR was a boon to Nairobi and Mombasa residents, according to The East African newspaper, it still accounts for only half of the expected Feasibility Study revenue, raising fears about the country's ability to repay the loan. It was also criticized that it was heavily overpriced and allegedly cost three times the international standard.
Repayments begin in mid-2019 when a five-year grace period expires. On Friday Kenyatta insisted that "we are ahead of our payment plan".

"We are not tied to any country," he added.

& # 39; country grab & # 39;

According to the Economist Intelligence Unit (EIU), Chinese companies granted $ 50 billion in foreign loans during the first half of 2018, increasing their announced investments of more than $ 8 trillion.

However, this figure declined from the same period last year, as concerns about the BRI increased both overseas and in China.

"(End of 2018) has been exposed to a number of high-profile projects (including in Malaysia) or scaled back (including in Myanmar) in the face of mounting concerns about the sustainability and transparency of debt," said the EIU report.

Many countries that were originally prepared to take Beijing's money into account have expressed concern over what could happen if they defaulted, especially after the Sri Lanka agreement.

Part of the problem stems from Beijing's ad-hoc approach to solving debt issues. This is clear from a report by the Center for Global Development (CDG), which points to a lack of consistency in dealing with defaulting countries. In the past, China was prepared to write off or restructure debt and extend credit lines while at other times demanded assets to service the loans.

"Without a governing multilateral or other framework to define China's approach to debt sustainability issues, we have only limited evidence of ad hoc measures taken by China as a basis for characterizing the country's policy approach "said the CDG report.

This creates significant uncertainty and forces governments to borrow from China in order to maintain strong bilateral relations to ensure future credit policy.

  A rail connection between the Kenyan cities of Mombasa and Nairobi was a boon to passengers, but critics say it cost too much and exposed the country to China.
African politicians praised President Xi after the Forum for China-Africa Cooperation (FOCAC) in Beijing in September with President Botswana President Mokgweetsi Masisi, who told the state media, "We admire and appreciate you very much! and kindness on and international perspectives as bright as the Chinese spirit! "
" Your friends in Botswana wish all the best for a successful One China! "He added, an obvious reference to Beijing's policy regarding Taiwan, a key element in its approach in Africa, where many countries have relinquished diplomatic relations with Taipei in favor of Beijing in recent years.

In other countries, however, concerns and uncertainty about the BRI have sparked a backlash against China – especially in the Maldives and Malaysia, where opposition parties in Beijing have recently taken power.

In January 2018, former Maldivian President Mohamed Nasheed accused Beijing of "land grabbing" in his country. After taking power in November, its Maldivian Democratic Party pledged to end "China's colonialism" and renegotiate the loans it signed with former strongman Abdulla Yameen with Beijing.
Prime Minister Mahathir Mohamad, recently elected by Malaysian Prime Minister, has postponed two China-funded projects over fears of bankruptcy in the country.

China has vigorously resisted such criticism, claiming it is subject to a double standard.

"It's unreasonable that money coming from Western countries is praised as good and sweet, and if it comes from China, it's scary and a trap," Foreign Ministry spokeswoman Hua Chunying said in September ,

Fork on the Road

While the loudest criticism of the Belt and Road initiative came from overseas, China is increasingly doubting the project.

Since the introduction of the BRI, critics have warned that China can be overwhelmed, and billions of dollars are wasted on projects that never pay off. While Beijing can take control of certain projects to pay off debt, strategic gains could be offset by a plethora of white elephant investments that are of little use to China.
A survey recently conducted by Peking University and the Beijing-based Taihe Institute found that nearly half of the 100 surveyed countries were not well-suited to BRI projects due to funding constraints and infrastructure weaknesses "before continuing to advance.
The BRI is also under pressure from Washington and other rival nations, who want to prevent China from crowding out of its influence on developing countries, to avoid potential funding shortfalls for future projects, despite the temporarily suspended trade war.
While booster abounds for the BRI There are signs that a shift is underway and the number of contracts signed in 2018 has declined compared to previous years and reports have been made to the country's major development banks communicated, there They should work together on future projects with the World Bank and other international lenders.

The Belt and Road Initiative Should Be the Signature of Xi A project that would bring China back to its traditional position of power and domination both in Asia and across the board.

But when the country enters in 2019, the plan looks shakier than ever – and seems to require a rethink. If this is not the case, according to Bloomberg analyst Nisid Hajari, there is a danger that "this plan to project, influence and trade Chinese power in much of the world could undermine all three."


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