China has been on an investment spree in recent years, at home and abroad. At home, investment has been one of the engines that, together with exports, have fueled its robust growth. Abroad, investments have served China’s ambitions to control the South China Sea and secure a waterway all the way to the Middle East oil and Africa’s riches.The trouble is that many of these projects aren’t economically viable; they are built at inflated costs; and leave the host countries heavily indebted to Beijing.
They aren’t economically viable because they serve the needs of Beijing’s central planners rather than the needs of the local markets.
“Chinese President Xi aims to realize the ‘great rejuvenation of the Chinese nation’ by projecting power overseas through the “Belt and Road” initiative, which covers both Southeast Asia and Africa,” says Xiaomeng Lu of Access Partnership. “This political economy effort is paired with China’s growing military might in the South China Sea and the African continent, posing a growing challenge to the U.S. security umbrella worldwide.”