SATISH SHARMA - not just Rotigraphy.: Everything you’ve been told about the Belt and Road Initiative being a “debt trap” is provably wrong.

https://x.com/agent_of_change/status/2088280284919677037

Carlos

Well this is awkward. Everything you’ve been told about the Belt and Road Initiative being a “debt trap” is provably wrong.

A new study from Nanjing University, published in the peer-reviewed Quarterly Journal of International Politics, has run the numbers on the Belt and Road Initiative across 197 countries and regions over 2000 to 2023 – including the 146 countries that have signed BRI agreements and the 135 where projects have been launched or completed.

The headline finding: there is no evidence that BRI participation increased financial vulnerability. Quite the opposite. Debt levels fell in participating countries, and the more infrastructure was built, the more debt fell.

The team also found improvements in corruption control, government effectiveness and quality of governance among recipient countries.

Study lead Mao Weizhun noted: the debt trap “lacks empirical support”, and the limited cases of genuine debt distress “were not caused by the Belt and Road Initiative or infrastructure construction, but by long-term structural economic problems accumulated by participating countries”.

The mechanism is not complicated. The investment paid for productive assets – ports, railways, power networks, communications. Those expand logistics capacity, industrial activity and the tax base, which is how a country repays a loan. This is the opposite of borrowing to service previous borrowing, which is what a great deal of Global South sovereign debt actually funds.

Somebody will point out that this is a study in a Chinese journal. Sure. But its findings are entirely consistent with what Western researchers found when they bothered to look. Chatham House demolished the debt trap thesis in 2020. Deborah Brautigam at Johns Hopkins has spent years documenting that Chinese lending to Africa is overwhelmingly infrastructure finance – around 40 percent to power generation and transmission, another 30 percent to transport – on a continent where over 600 million people have no electricity.

Over three-quarters of Global South external sovereign debt is owed not to states but to private Western financial institutions, which have no obligation to consider anybody’s development needs and every incentive to extract the maximum. As Tim Jones of Debt Justice UK has put it, Western leaders blame China for Africa’s debt crises, but their own banks, asset managers and oil traders are far more responsible; he further notes that China took part in the G20 debt suspension scheme during the pandemic while private lenders did not.

The debt trap is real enough, but it’s been set by Western financial institutions and their governments, not by China. The BRI is a South-South cooperation initiative that helps countries build productive capacity, and all serious analysis indicates that it’s strengthening rather than weakening the countries that participate.