Analysis. While China has aggressively expanded infrastructure in the countries along its ‘new Silk Road,’ those countries are now shrinking away from Chinese loans amid fears of over-indebtedness to Beijing.

Debt fears slow down the ‘project of the century’

Presidential elections took place last week in the Maldives. The country, well known as a tourist destination, went to the polls after a very stormy period in the political realm. After leading a coup, declaring a state of emergency and arresting or exiling his main political opponents, former President Yameen was considered to be the indisputable favorite to win re-election. Those predicting his victory were also counting on an important fact: he was the candidate backed by China.

When the result of the vote became known—a resounding defeat for Yameen—Beijing must have been very displeased.

The winner ended up being the candidate of the opposition, close to India, one of the countries concerned about what might happen in Asia as a result of Beijing’s hegemony. And the main driving factor for the opposition’s victory was the country’s fear of finding themselves, in the very near future, fully in debt to Beijing.

China had funded various projects in the Maldives, including a historic “Friendship Bridge” linking its capital to the international airport—a clear example of how Beijing sees its mammoth project of the “New Silk Road,” which is supposed to work on several fronts: primarily in terms of pure commerce, implemented through realizing China’s desire to create new routes to offload its manufacturing surplus into new markets.

However, there is an important geo-strategic factor that right now has become one of the main obstacles standing in the way of China’s “project of the century”: Chinese loans are beginning to cause fear among the countries receiving them, due to the risk of over-indebtedness. According to some analyses, from Xi Jinping’s 2013 announcement of the project in Astana until 2049, the centenary of the People’s Republic and a moment when the New Silk Road should already be at an advanced stage of completion, Beijing could invest between 1 trillion and 8 trillion dollars. These are truly impressive figures.

But the election in the Maldives is yet another red flag for Beijing, after China has already suffered local “defeats” in Malaysia and Myanmar, two countries that have recently stopped or drastically cut back some joint projects with Beijing that they had previously agreed to.

For Xi Jinping and his close circle of collaborators, these signals cannot be ignored: even though the CCP had already factored in that they would take large losses on their investments, even in Pakistan, China’s newfound strength and international posture are starting to be perceived as “problematic.” What is certain, however, is the fact that the New Silk Road has already been added to the CCP’s Constitution, and will be the main project that will occupy the whole country in the coming years.

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