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Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective

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  • John Hurley
  • Scott Morris
  • Gailyn Portelance

Abstract

China’s Belt and Road Initiative (BRI) hopes to deliver trillions of dollars in infrastructure financing to Asia, Europe, and Africa. If the initiative follows Chinese practices to date for infrastructure financing, which often entail lending to sovereign borrowers, then BRI raises the risk of debt distress in some borrower countries. This paper assesses the likelihood of debt problems in the 68 countries identified as potential BRI borrowers. We conclude that eight countries are at particular risk of debt distress based on an identified pipeline of project lending associated with BRI. Because this indebtedness also suggests a higher concentration in debt owed to official and quasi-official Chinese creditors, we examine Chinese policies and practices related to sustainable financing and the management of debt problems in borrower countries. Based on this evidence, we offer recommendations to improve Chinese policy in these areas. The recommendations are offered to Chinese policymakers directly, as well as to BRI’s bilateral and multilateral partners, including the IMF and World Bank.

Suggested Citation

  • John Hurley & Scott Morris & Gailyn Portelance, 2018. "Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective," Policy Papers 121, Center for Global Development.
    • Handle: RePEc:cgd:ppaper:121
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    References listed on IDEAS

    as
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    Cited by:

    1. Gelpern, Anna & Horn, Sebastian & Morris, Scott & Parks, Bradley & Trebesch, Christoph, 2021. "How China lends: A rare look into 100 debt contracts with foreign governments," Open Access Publications from Kiel Institute for the World Economy 317054, Kiel Institute for the World Economy.
    2. Scott Morris & Brad Parks & Alysha Gardner, 2020. "Chinese and World Bank Lending Terms: A Systematic Comparison Across 157 Countries and 15 Years," Policy Papers 170, Center for Global Development.

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