Andrew Cainey

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China hosts the Belt and Road Forum in 2017. Photo: Getty Images.

One of the original motivating forces for China’s Belt and Road Initiative is risk management: the aim being to use infrastructure to drive economic development, so improving political stability and creating a favorable impression of China in countries bordering China and beyond.

Yet these investments themselves are inherently risky: large-scale, debt-financed, long-term infrastructure projects in countries that often have weak governance, undefined or poorly-executed rule of law and corruption. China has experience managing infrastructure risks within its borders in its own ways, but it has much less experience overseas.

And, while well-executed investments can enhance stability, the same investments, executed poorly, can create their own backlash in countries that see costs exceed benefits.…  Seguir leyendo »

Chinese Foreign Minister Wang Yi at the Belt and Road Forum in Yanqi Lake in May 2017. Photo: Getty Images.

First announced in 2013, President Xi Jinping’s Belt and Road Initiative promises, at a minimum, to improve infrastructure and connectivity between China and the rest of Eurasia. Any bold plan to finance infrastructure on a large-scale across so many low-income economies deserves a sympathetic ear and a positive reception. But many wonder how large the role can be for non-Chinese players in what is clearly an initiative of the Chinese government.

So far, Chinese state and policy banks account for the overwhelming majority of the financing – and this money then flows to Chinese enterprises, mainly state-owned.  One study found that 89% of the work went to Chinese contractors on China-funded projects.…  Seguir leyendo »