China’s belt and road plans face new EU, US competition, but ‘space for cooperation’ remains

The EU’s Global Gateway and the US-supported Build Back Better World (B3W) initiative have raised questions about the impact on China’s Belt and Road Initiative

But experts say the global infrastructure deficit is so large, there is room for multiple players and even opportunity for collaboration between China and the EU

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A section of a highway connecting the Montenegrin city of Bar to Serbia under construction in 2019, financed by the Exim Bank of China. Photo: AFP

Published: 1:00pm, 4 Feb 2022Updated: 3:24pm, 4 Feb 2022

China is unlikely to be displaced as the main funder of infrastructure projects among belt and road countries even as alternatives like the European Union’s Global Gateway plan come online, analysts say.

But after a series of setbacks, Beijing is taking a more discerning view on how it engages with many developing countries.

A number of flagship projects along China’s modern-day Silk Road, which seeks to link Asia, Europe and Africa with a network of ports, motorways and railways, have run into challenges in recent years.

Montenegro, a tiny Balkan state of just 620,000 people, reached a deal with European and US banks last year to restructure a Chinese loan of nearly US$1 billion for a highway, despite its lender, the Export-Import Bank of China (EXIM), offering an 18-month grace period for repayment.

Indebtedness to China became a hot-button issue in Montenegro, with deputy prime minister Dritan Abazovic asking for the EU’s help in managing credit repayments to “combat unhealthy foreign influence”.

Governments in Africa and Central Asia have also cancelled or reviewed projects due to difficulties with Chinese lenders and fears over foreign influence.