Xi Jinping’s Flagship Project, the BRI Is Proving to Be a Financial Sinkhole for Emerging Countries.
However, the CCP has no intention of stopping this project, which should enable it to extend its domination over the world.
In January 2022, China's foreign minister chose Kenya for his first foreign trip of the year. In this stronghold of “Chinafrica,” Wang Yi announced the appointment of a special envoy to oversee peace talks in the Horn of Africa (even as China is accused of selling arms to Ethiopia). But his visit was also aimed at reviving the Belt and Road Initiative (BRI) a program in which Beijing has already invested $932 billion, but slowed down notably by the COVID-19 crisis.
Launched in 2013 at the initiative of President Xi Jinping, it now brings together 68 countries, mainly emerging economies, to build huge infrastructures. In April 2019, 37 heads of state gathered in Beijing around the Belt and Road Initiative. Among them, the Kenyan president came to collect a $600 million loan and sign contracts for the creation of a data center in the new technology city of Konza by the telecom giant Huawei, and a 27-kilometer expressway serving Nairobi International Airport.
Africa alone accounts for more than half of the money spent on this BRI program.
Three countries are at the forefront: Kenya, Ethiopia, and Djibouti. There, ports, roads, and railroads have been largely financed by Beijing, such as the Standard Gauge Railway (SGR), which has linked Nairobi to Mombasa since 2017. But from the start, this project has had its pitfalls.
Despite the creation of 30,000 jobs, many Kenyans complained about unskilled and low-paying jobs. In addition, the SGR has incurred losses of more than $200 million in the past three years. “There have been deficiencies in planning and overly optimistic predictions of profitability, not to mention inflated construction estimates. All of this, combined with COVID-19, has contributed to Kenya's dangerously high debt,” notes Phebe Wilson-Andoh in a study published by the Foreign Policy Research Institute. It has reached $66 billion by 2021, up from $5 billion two decades ago.
As a result, the Kenyan government has nationalized the line in 2021 to cut operating costs in half. And the project to link Kenya, Uganda, Rwanda, Ethiopia, and South Sudan by rail has been halted. Elected in September 2022, the new president has not hesitated to take on Beijing: he has canceled the monopoly of Chinese logistics companies in the port of Mombasa. Relations have become strained with its main backer, who has since refused to extend the port's logistics platform.
This failure reveals the difficulties experienced by the BRI which targets some of the poorest and most unstable countries on the planet. These countries find themselves trapped in a debt trap, with the risk of seeing China seize the infrastructure it has financed if the loans are not repaid.
Nearly 60% of the Middle Kingdom's loans abroad are held by over-indebted countries such as the Democratic Republic of Congo, Sri Lanka, Egypt, or Laos. “Investments dominated by the Chinese will to establish its international influence, more than by real needs,” note the analysts of the rating agency Fitch.
Aware of the risks of seeing these countries default, China has been cutting back for four years.
The most troubled countries, such as Egypt and Sri Lanka, have not obtained new loans in 2022. And new investments have been cut by almost half, from $117 billion in 2018 to $59.5 billion in 2021. But there is no turning over a new leaf for Xi Jinping and the CCP. The project is likely to endure, as it has allowed Xi Jinping to ally with the South to isolate the North. The countries that are part of it have a clear tendency to align themselves with China's positions at the UN.
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