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Inside Out | Xi Jinping’s Central Asia trip can highlight megaprojects and debt distress for poor countries
- The Shanghai Cooperation Organisation meeting this week will address many issues, but top of the list should be the Belt and Road Initiative and debt
- The initiative has drawn harsh criticism, but has also inspired the US and EU to launch their own infrastructure programmes, which will inject competition and new ideas
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As President Xi Jinping travels from Nur Sultan in Kazakhstan to Samarkand in Uzbekistan this week for a meeting of the Shanghai Cooperation Organisation (SCO), the likelihood is that these discussions will receive indifferent silence across most of the Western media.
As far as the SCO – which groups the Central Asian economies of Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan with China, Russia, India and Pakistan – attracts attention at all, it is likely to follow the narrative of a bunch of autocrats huddled together to parry the impact of the West’s sanctions on Russia for its invasion of Ukraine and cut a series of energy supply deals that help them trim their oil and gas bills.
Most likely, they will actually devote most of their attention to their neighbour Afghanistan, regional challenges from terrorism, the importance of Belt and Road Initiative megaprojects and the recent alarming rise in debt burdens. It is hard to gauge which they regard as the most pressing but, from my point of view, the issue of greatest global importance is the initiative’s megaprojects and debt.
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Since the launch of the belt and road in 2013, China has become the world’s single largest bilateral creditor. In the process, it is fundamentally altering the nature of the West’s relationships with Africa and developing Asia.
Many countries’ debts have soared through the Covid-19 pandemic, interest rates have lurched upwards in response to surging inflation and the prospect of global recession looms. Thus, the difficulty of many of the world’s poorest countries in managing the debt service costs linked with belt-and-road-supported infrastructure building has become a priority concern not just for Central Asian countries but for governments much further afield.
China’s huge investment programme with the initiative, amounting to around US$932 billion since 2013, according to Fudan University’s Green Finance and Development Centre, has come to sit at the heart of concern, and not a little controversy. Observers complain about corruption, sloppy project oversight and disregard for the capacity of governments to repay debts, and others insist China is engaging in “debt trap diplomacy”.
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