China Confronts Major Risk of Debt Crisis on the Belt and Road Due to Pandemic

The COVID-19 pandemic threatens to cause a wave of economic crises along China’s Belt and Road Initiative (BRI). With several BRI countries already facing high external debt and likely to be hit hard by the pandemic, Beijing is poised to confront multiple, simultaneous debt crises in countries where it is heavily invested. As a report by the International Institute for Strategic Studies (IISS) highlights, China would have faced constraints on its future lending and debt renegotiations even if the pandemic had not occurred. But now, China faces a serious test to preserve the BRI, to maintain its own domestic financial stability, and to cooperate in an unprecedented way with other creditors.

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