Belt and road investments may not rebound quickly to pre-pandemic levels as Asean governments grow more wary, Maybank report says Nearly 60 per cent of China’s overseas loans now held by countries considered to be in financial distress, report points out
Beijing’s plans to expand its ambitious Belt and Road Initiative project in Southeast Asia could face setbacks as governments grow wary of sharper debt risks and increasing Chinese influence in the region.
The post-pandemic recovery might not be as strong as hoped for, Maybank economists warned in a recent report, though they projected an uptick in Chinese infrastructure and construction investments in the region.
“We expect [belt and road] investment flows into Asean to recover with the reopening [of China] but [these] may not rebound quickly to pre-pandemic highs,” said the economists, referring to the 10-member regional bloc.
The initiative, often viewed as President Xi Jinping’s signature project, was launched in 2013 with the aim of boosting trade and connectivity, and showcasing China’s global ambitions.
Chinese officials recently said it had brought in nearly US$1 trillion in investments for partner states, created 420,000 local jobs and helped lift almost 40 million people out of poverty in its 10 years of existence.
Southeast Asia has long been among the key beneficiaries of the initiative. According to the Maybank report published last week, China’s investment and construction contracts in the region peaked in 2018 at about US$31.8 billion, before declining for the next three years.
As the pandemic raged on and businesses were unable to reach deals, investments in 2021 clocked a record low of US$10.8 billion.
However, they recovered by 72 per cent last year to US$18.6 billion, including contracts in hard infrastructure such as energy, railways and roads, and sectors like technology, finance and real estate.
Southeast Asia has long been among the key beneficiaries of the initiative. According to the Maybank report published last week, China’s investment and construction contracts in the region peaked in 2018 at about US$31.8 billion, before declining for the next three years.
As the pandemic raged on and businesses were unable to reach deals, investments in 2021 clocked a record low of US$10.8 billion.
However, they recovered by 72 per cent last year to US$18.6 billion, including contracts in hard infrastructure such as energy, railways and roads, and sectors like technology, finance and real estate.
“There is growing hesitancy to accept China’s money as countries are more wary of China’s growing power and influence in the region,” they wrote.
The report pointed to a February survey by Singapore’s ISEAS-Yusof Ishak Institute, which showed that 64.5 per cent of respondents in Southeast Asia were worried about China’s growing influence. This was particularly true for Vietnam, Thailand, and the Philippines.
Territorial disputes between China and some Southeast Asian nations remained a “sore point”, the report added, noting that Vietnam had “mostly avoided engagement with China” when it came to the belt and road.
In countries like Cambodia and Laos, the forced relocation of rural communities to pave the way for belt and projects has also sparked some discontent, presenting a potential sticking point.
Source: South China Morning Post