More countries refuse loans from China in effort to maintain control

Pakistan and Nepal have been added to the list of countries refusing Chinese money for government projects.

Pakistan and Nepal have decided to stop seeking funds from China for two large-scale development projects. Both are part of China's Belt and Road initiative.

Pakistan announced in mid-November of this year that they have decided to build the $14 billion Diamer-Basha dam on the Indus River without the help of Chinese loans. They cited that China's conditions for financing the project "were not doable and against (their) interest". The project was supposed to be part of the roughly $60 billion China-Pakistan Economic Corridor.

Nepal also decided to halt a $2.5 billion Budhi Gandaki hydropower plant venture it has with China's Gezhouba Group, citing irregularities and failure to conduct a competitive bidding process as reasons for pulling the plug. Nepal Electricity Authority, a state-owned company, was tapped to go ahead with the construction.

According to Christopher Balding, a professor of economics at Peking University HSBC Business School, "Very early on the countries along the Belt and Road initiative were at first very excited and happy about Chinese investment. But there have been significant changes: Countries now look at how China has behaved with Sri Lanka or with Mexico."

One of the projects Balding mentioned is the Hambantota port in Sri Lanka, which is now on a 99-year lease to China Merchants Port Holdings, who also have a whopping 70% stake in the venture. It appears that although countries along the Belt and Road initiative welcome the foreign investment and assistance from China, they are also starting to realize that once these projects are complete, they end up losing too much control.

Learn more about why counties are now refusing Chinese loans by reading "More neighbors are saying 'no thanks' to Chinese money - for now" written by Ilaria Maria Sala and published by Quartz Media on December 4, 2017.

Comments

Stories