WSJ What’s News
China Reins In Its Infrastructure Strategy But Not Its Global Ambition
Sun, 02 Mar 2025
The early years of the Belt and Road Initiative left China with tens of billions of dollars in soured loans, making it a costly way of building global influence. Now Beijing is reworking its flagship infrastructure lending program to shield itself from financial risk and focus on projects that support its evolving ambitions, including securing critical supply chains for things like green-tech minerals and positioning itself as a leader that developing nations can unite behind. In the second episode of our three-part series, “Building Influence,” AidData’s Bradley Parks, SOAS University of London’s Steve Tsang and the WSJ’s Chun Han Wong discuss Belt and Road 2.0 and how even though China is reducing its spending, it is no less ambitious when it comes to pursuing Xi Jinping’s strategic goals. Kate Bullivant hosts. Further reading: China’s Belt and Road Plan Is Down, Not Out China Reins In Its Belt and Road Program, $1 Trillion Later China Is Starting to Act Like a Global Power Learn more about your ad choices. Visit megaphone.fm/adchoices
What is the Belt and Road Initiative 2.0?
And Chinese companies are also trying to gobble up market share in a variety of renewable energy sectors, whether that's solar, wind, hydro. There's a concerted effort by the banks and the companies to cement the competitiveness of Chinese companies around the globe in these clean energy sectors.
Those sorts of course corrections help the Belt and Road Program invest in the industries and supply chains that Beijing sees as the future. And, as we heard before the break, China has changed the way it cuts deals, charging higher rates and asking countries to put up more collateral.
They have also tried to muscle their way to the front of the repayment line by requiring something that their competitors do not require. And that is that governments keep cash collateral in lender-controlled escrow accounts that Beijing can unilaterally debit with a keystroke, right? They could just grab that cash and pay themselves in the event of default.
But as we talked about last week, China isn't, for the most part, going around the world grabbing collateral from countries that are struggling to repay their debts. So does this mean that China's portfolio is out of the woods? Could Beijing actually be about to reap a financial windfall as those loans start getting repaid? Here's what Brad had to say.
Also auf dem Papier würde ich sagen, dass China gut positioniert ist, um einen großen Windfall zu erzielen. Aber ich denke, in der Praxis ist die Wahrscheinlichkeit, dass es so aussehen wird, wie sie es denken, nicht ganz so hoch.
Als China zuerst in das Emergency-Rescue-Lending-Business kam, war es unter der optimistischen Überzeugung, dass einige ihrer größten Anbieter kurzfristige Bridge-Finanzierung benötigen mussten. zu einem Sturm, der bald übergehen würde. Aber ich denke, es wird jetzt gelernt, dass einige seiner größten Beld & Rode-Berufer tatsächlich insolvent sind.
I would say that they are still actively firefighting and they're going to be firefighting for many years to come. They're doing serial bailouts year after year. So ultimately, to get out of this, China may have to take financial losses. The big question for China is how quickly it will learn and adapt to what it's seeing in its portfolio.
We reached out to China's Ministry of Foreign Affairs for comment on their debt portfolio and how many of their borrowers are insolvent. They didn't address this specifically, but they did say they provide developing countries financing at preferential interest rates and with longer maturities.
Up next we take a look at how all these changes to Belt and Road set up Beijing to continue gathering global influence. That's after the break. The jury is still out on whether China will take an economic hit from the Belt and Road.
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