China needs risk assessment, anti-corruption measures to address ‘challenging’ belt and road environments
- President Xi Jinping last week called for businesses to assess overseas risk regularly, while also establishing a risk monitoring system and anti-corruption legal framework
- The US and its allies have criticised China for using its Belt and Road Initiative as a geopolitical weapon that creates debt problems for member countries
China needs to ramp up its risk assessment and anti-corruption measures to mitigate political dangers and credit instability in its Belt and Road Initiative, analysts said, following a similar call from President Xi Jinping.
Despite seeing concrete success with its flagship investment programme, Xi emphasised businesses’ responsibility to assess overseas risk regularly, as well as the need to establish an “all-weather” risk monitoring system and a thorough anti-corruption legal framework in a speech last week.
This came after China’s pivot to green finance in a pledge to stop funding coal plants overseas in September, as well as a bombing attack against a convoy of Chinese engineers in Pakistan in August.
The risks mentioned in Xi’s speech arise from reputational concerns, political instability in recipient countries and debt repayment issues, according to Tianyu Chen, an economist at The Economist Intelligence Unit (The EIU).
Those risks are heightened because China’s belt and road reaches into some very challenging business environments, and it does so without adequate transparency and quality control
“Large infrastructure projects typically cost more than expected, take longer than expected, and deliver fewer benefits than expected – and that’s globally,” Jonathan Hillman, a senior fellow at the Centre for Strategic and International Studies, said.