(LibertySociety.com) – China’s Belt and Road Initiative (BRI) has been under scrutiny for many years. In recent months, critics have pointed out that the Communist government has become the largest debt collector in the world. Many have blasted the country for offering loans to poor and underdeveloped nations, knowing they will be unable to repay them. Researchers at the AidData lab at Virginia’s William & Mary College found that an increasing number of projects have been canceled, but that debt was still climbing. China has increased interest rates on delinquent borrowers, charging 5.7 percent more on late payments.
The Chinese government has growing concerns about the ability of poorer nations to repay their loans. AidData noted that fewer loans are being made but with stricter terms. In turn, China is receiving lower approval ratings from nations that owe money, especially those that have changed administrations. China has long touted the success of the BRI, especially regarding fewer hoops to jump through for the approval of projects. In addition, BRI does not require multiple bids to be made for projects, and the initiative makes no qualms about ignoring Environmental and Social Governance (ESG) recommendations.
The BRI is currently undergoing a “reboot” to revitalize the initiative and attract more projects. In doing so, the government has required some ESG standards to be followed in new projects, but skeptics say they still will not meet the standards set by America and Europe. China admits that the reboot will slow the growth of the BRI but believes that it will result in less risky lending practices. China’s Foreign Ministry spokesperson Wang Wenbin blasted those who believe that China was setting up “debt traps” for undeveloped nations. He boasted that China was there for nations that the West has long ignored, adding that critics often ignore the benefits of the BRI and instead focus solely on the debts that those nations have incurred.
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