HONG KONG (Reuters Breakingviews) - China’s Belt and Road Initiative can pave over only some of its potholes. A gathering in Beijing this week to promote the $1 trillion-plus foreign policy push comes after a bumpy year for the flagship scheme, from Pakistan to Malaysia. Under pressure, China has shown some welcome flexibility. But U.S. hostility is ramping up too, and that will be far harder to repair.
Leaders attending the summit, which starts on Thursday, will see a recalibrated version of President Xi Jinping’s signature initiative. That’s sensible, given unprecedented trouble across the nearly global programme. The biggest block came in Malaysia, where a new government last year suspended construction on a Chinese-backed rail project linking the country’s east and west coasts. Pakistan – among the top recipients of Belt and Road largesse – has put on hold many projects in the $62 billion China-Pakistan Economic Corridor. Several other nations, from the Maldives to Myanmar, are wrestling publicly with the scale of deals made with the People’s Republic.
To its credit, Beijing is taking some of the criticism on board. It agreed, for instance, to slim the Malaysian rail project’s scope and original price tag by more than 30 percent. It provided Islamabad with additional lending to head off a potential financial crisis, and may be preparing to sign a first phase of new development aid projects for the country. Chinese banks too seem pickier these days about evaluating new projects.
But the past months have turned up a threat bigger that reluctant recipients – an increasingly aggressive Washington. U.S. Vice President Mike Pence struck an overtly hostile tone when he cautioned countries last year that the United States did not drown its partners in debt, or offer “a constricting belt or a one-way road”. Senior diplomats have warned of China’s so-called debt traps and payday lending practices. A U.S. advisory team was even dispatched to Myanmar to help the country scrutinise Chinese deals, the Wall Street Journal reported.
The danger is that tough talk eventually morphs into a geopolitical stand-off, with poorer countries forced to choose between Chinese or U.S.-backed support. That dynamic will be much harder for Beijing to fix than a hefty loan. In the long run, it may also prove far more damaging for everyone involved.
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