China’s Belt and Road Initiative, also called the New Silk Road (BRI), has been the cornerstone of China’s foreign policy for the last decade.
The BRI, which spans Southeast Asia and Africa aimed to link continents by extensive infrastructure projects.
The initiative was criticized by some, who saw it as China’s way to increase its influence in the world.
As China moves into a new phase – often referred as BRI 2.0 – it is raising questions regarding its strategy, and the implications of its partnership, especially in Africa.
Africa trapped in China’s debt trap
China hosts the China-Africa Cooperation every three years. This event is aimed at strengthening diplomatic and economic relations with African countries.
China has historically invested in Africa primarily to support development through large-scale infrastructure projects.
In 2019, these projects started to put a strain on China’s finances, which was exacerbated due to the COVID-19 epidemic.
China’s investments into developing countries have slowed down significantly as it struggles to deal with its domestic problems.
African countries began to face financial pressures, as many had accumulated significant debt due to Chinese loans.
As a result of the earlier investments, discussions about debt sustainability began to emerge.
Yunnan Chen is a researcher who notes that, while the political relationship between China and Africa remains robust, there has been a shift in financing.
As African countries are cautious of taking on additional debt, the enthusiasm for Chinese large-scale investments is waning.
Confidentiality and smaller projects
China needs to adapt significantly its BRI 2.0 approach if it is going to be successful.
The new strategy is based on smaller and more manageable projects.
China recently signed a deal with South Africa in which the financial terms were confidential, a change from its previous practice where China had publicly committed billions of dollars.
China is trying to manage its debt and reduce the financial burden by funding smaller projects. These are typically worth around $50 million.
The smaller, cheaper projects that yield faster results are intended to improve China’s reputation among Africans while avoiding massive debt.
China allocated $4.6billion for mini-projects in just the last year, the most investment of the five previous years.
The gradual rise in small investments indicates a pivot to a less controversial and more sustainable approach.
China and Africa: the future of engagement
The focus on smaller projects, as China advances with BRI 2.0 could mitigate the financial stress experienced by the original BRI Framework.
Africa is cautious, but willing to collaborate with other countries if they align themselves with their economic goals and debt management strategy.
The long-term effects of BRI 2.0 are yet to be determined. While BRI 2.0 aims at fostering development, it does so without the debt that was associated with previous projects.
China’s changing approach to Africa could offer a sustainable and more balanced investment model.
China’s Belt and Road Initiative is likely to be successful if it adapts and addresses past criticisms.
The impact of China’s and Africa’s investments on the global economy and geopolitical dynamics will be monitored closely as both countries navigate through this new phase.
The post What can we expect from China’s Belt and Road Initiative 2.0? may change as new information becomes available.
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