Page 4 - AsiaElec Week 35 2021

AsiaElec COMMENTARY AsiaElec

The crushing weight of China’s

debt burden on Eurasia

CHINA EMERGING European economies were already infrastructure projects as part of the BRI. Back in
facing heavy debt burdens before the pandemic. 2012, China launched the 17+1 (now 16+1 after
Now they have been put under new pressure Lithuania pulled out this year) format for co-op-
as they struggle to boost spending to support eration with the region.
their flagging economies and fund healthcare While many governments in the region ini-
systems that are creaking under the weight of all tially welcomed the billions of dollars flowing
the coronavirus (COVID-19) patients, just as tax from Chinese coffers, especially during and
revenues slump because of the economic shock immediately after the Great Recession, relations
of the pandemic. with some have since soured.
Four countries were identified back in 2018 as The collapse of conglomerate CEFC China
most at risk from debt distress due to huge loans Energy, which had bought up numerous compa-
they took out to participate in China’s Belt and nies in the Czech Republic in particular, caused
Road (BRI) initiative. bne IntelliNews looks at Prague to distance itself from Beijing as enthusi-
how those four countries – Kyrgyzstan, Mongo- asm for China’s investment drive began to wane.
lia, Montenegro and Tajikistan – have handled More recently, there were reports of an exo-
the crisis. dus of Chinese investment from Russia, which
These four countries are not alone in embark- failed to persuade China to finance construction
ing on major infrastructure projects under the of some major transport and energy projects.
BRI (initially called One Belt One Road, or Meanwhile, Romania scrapped talks with Chi-
OBOR) launched by Beijing to create a huge web na’s nuclear power company CGN in favour of
of land and sea trading routes, primarily from a group of Western companies for the project
East Asia to Europe, but also linking in Africa to expand its Cernavoda nuclear power plant
and parts of Latin America. (NPP). Lithuania took the strongest stance
Emerging Europe plays an important role in against China in 2021, when it first pulled out
the BRI; the concept was initially launched by of the 17+1 format, then announced plans to
Chinese President Xi Jinping during a trip to establish reciprocal diplomatic offices with Tai-
Kazakhstan in 2013. wan, causing China to withdraw its ambassador
The Eurasian countries are part of a land from Vilnius.
bridge that links China to Europe, but the BRI The worsening of relations is partly a conse-
also goes on through the Central and South- quence of deals that collapsed or projects that
east European countries that are also part of the have progressed too slowly – even the pro-Chi-
transit routes as well as potential manufacturing nese Serbian government rebuked China
hubs for Central and Western Europe for Chi- Machinery Engineering Corporation (CMEC)
nese business. for its work on the Kostolac B power plant – but
The land bridge also has the added appeal of it also comes in the context of China’s struggle
being on dry land and so well away from the sea for global supremacy with the US and Washing-
lanes linking Asia to Europe, the main route in ton’s diplomatic offensive in the region. The latter
the transit of goods, and ultimately controlled by has persuaded numerous Central and Southeast
the powerful US Navy. China is playing a very European states to sign up to a declaration on
long game to improve both its commerce as well communications security effectively barring
as reduces its security pressure points should it China’s Huawei from participating in 5G infra-
get into a serious clash with Washington. structure projects.
There has also been a volley of reports and
Enthusiasm for Chinese investment on the op-eds from US-based think-tanks on debt
wanea dependency and other risks of co-operation
Following the 2008 international financial cri- with Beijing. China is rapidly replacing Russia
sis, Chinese firms started snapping up indus- as the geopolitical bogeyman in the barrage of
trial and commercial assets in the region, and invective churned out by the American Beltway
at the same time launched transport and energy think-tank industry. ™

P4 www. NEWSBASE .com Week 35 01•September•2021