ince its launch in 2013, China’s Belt and Road Initiative has garnered both appreciation and admiration from numerous countries and corporations worldwide. Nonetheless, it has also faced fierce criticism and sparked controversial narratives, such as China’s ‘debt trap’ diplomacy, through which it purportedly aims to dominate politics and policy in several countries across Asia, Africa and potentially South America. A recently published book, The Reality and Myth of BRI’s Debt Trap: Evidence from Asia and Africa, edited by Nian Peng and Ming Yu Cheng, is an attempt by Chinese scholars and experts from selected BRI countries to empirically address the debt-related allegations by certain Western policymakers and some Indian politicians and scholars.

One of the editors, Nian Peng, is an associate professor and research fellow at the Department of Foreign Languages and Research Centre for Indian Ocean Island Countries at South China University of Technology in Guangzhou, China. He is also the director of the Hong Kong Research Centre for Asian Studies in Hong Kong. Ming Yu Cheng is a professor at the Faculty of Accountancy and Management, director of the Institute of Management and Leadership Development, and chairperson of the Belt and Road Strategic Research Centre at Universiti Tunku Abdul Rahman in Malaysia.

The book is organised into 12 chapters, including the introduction by Nian Peng and Ming Yu Cheng. The editors have taken a balanced approach in terms of offering an analytical understanding of the socioeconomic opportunities and challenges posed by the BRI over the last decade. These opportunities and challenges are empirically analysed in 11 chapters of the book through case studies from select countries in Asia (i.e., Cambodia) and Africa (i.e., Nigeria).

In Chapter Two, Zhuo Hua Kou and Nian Peng contend that the BRI debt trap is a misunderstanding sought to be created by certain American, European and Indian policy and media circles. While acknowledging the debt-related challenges in certain countries, such as Cambodia, the authors disagree with the notion of a Chinese-engineered debt trap diplomacy intended to penetrate the political, financial and policy realms of the BRI states. Instead, they highlight the positive effects of BRI funds, which low-income countries such as Pakistan need(ed) to avoid default on debt payments.

In Chapter Three, Siling Yang and Angyu Jiang approach the so-called debt trap theory from a regional geopolitical perspective. The authors posit that the ‘theory’ has been developed and projected by India with the aim of countering the perceived Chinese influence in South and Southeast Asia. For the past decade, Indian academics, journalists and politicians have not only opposed the BRI and criticized the China-Pakistan Economic Corridor but also strategically allied with the US. India has joined alliances, such as the Quad, to resist China’s geopolitical rise.

In Chapter Four, Myint San presents a case study of the China-Myanmar Economic Corridor. The author argues that the CMEC could be a game-changer for Myanmar and the region. “With the development of the Kyaukphyu deep seaport, Myanmar will become the hub of regional economic activity.” Nonetheless, “the progress of CMEC project activities is slow because of the Myanmar government’s caution about the ‘debt trap’ issue.” He says the global recession caused by the Russia-Ukraine war, political instability and (maritime) conflicts have also hampered BRI development in Myanmar and the Southeast Asian region.

Neak Chandarith and Sok Sothearak, in Chapter Five, investigate the key causes and potential risks of Cambodia’s rising external debt. Cambodia’s external public debt stocks have raised considerable concerns over debt sustainability and China’s growing influence on the country’s policies. However, they conclude, Cambodia faces a low risk regarding its external public debt due to public-private partnerships, an effective debt management framework, concessional loans, a large foreign exchange reserve and a diversification strategy. Its challenges include the unpredictability of private debt, for which there is no management framework in place.

In Chapter Six, Sypha Chanthavong explores the positive and negative effects of the Laos-China Railway on Laos’s economy and society. The author posits that the project has “a significant role in the economic integration of Laos with neighbouring countries… the resettlement programme and social and environmental concerns during the construction and operation have imposed potential risks to the smooth run of the railway project.”

Most of the countries facing debt repayment issues have had political instability, rampant corruption and policy discontinuation.

In Chapter Seven, Alvin Camba et al analyse the debt trap thesis with reference to the Philippines. The authors posit that various analysts have misinterpreted the statements made by the Philippines. In Chapter Eight, Ming Yu Cheng and Kuk Fai Fok analyse Malaysia’s participation in the BRI. The authors give an in-depth analysis of the debt situation in Malaysia. They posit that “Malaysia’s exposure to Chinese debt is manageable and comparatively low.” They warn, however, that Malaysia and China must collaborate to ensure transparency in loan negotiations and disbursements, besides reducing the information asymmetry.

Candra Fajri Ananda and Risyaf Fahreza present their case study on Indonesia in Chapter Nine,. They argue that the BRI projects, such as the Jakarta-Bandung high-speed rail, have yielded economic benefits both locally and nationally. Nonetheless, they say, Indonesia should ensure the long-term financial viability of BRI-related investments and focus on human resource development.

In Chapter Ten, Kazi Mahmud-ur Rahman concludes that Bangladesh requires enormous amounts of capital for its economic and infrastructural development. Despite risks associated with loans, “China is an easy lending partner, as the chances for Bangladesh to borrow from others are slim…Bangladesh is well vigilant of its debt...foreign loans have been on significant rise, while older, cheaper sources of loans and grants have swiftly been on the decline in synchrony with their economic graduations.” He says the Bangladeshi leadership needs to act smartly in terms of effective governance, foreign exchange stability, debt repayment, efficient project implementation and financial transparency to avoid the risk of a debt trap.

Nepal’s interaction with China under the BRI has been analysed by Khadga Kc and Hari Prakash Chand in Chapter Eleven. The authors posit that although no projects have started under the BRI so far, the debt trap narrative has already emerged in Nepal. Calling the ‘debt trap’ a myth, the authors urge the Nepalese government to proceed with the BRI projects. However, they suggest, “Nepal should deal with the Chinese counterpart for grants first. The rest of the amount can be managed from soft loans.”

In the final chapter of the book, Michael Mitchell Omoruyi Ehizuelen analyses the potential benefits and challenges of the BRI in developing railway projects, focusing on the Abuja-Kaduna and Lagos-Ibadan Standard Gauge Railway in Nigeria. The author broadly examines the debt burden on the African continent. Ehizuelen dubs debt trap as a myth propagated by anti-BRI countries such as India. His policy recommendations include the inclusion of more stakeholders in BRI projects, making the BRI borrowing more affordable and ensuring project transparency.

This is a timely publication on a pertinent aspect of the Belt and Road Initiative, namely, loans incurred under the BRI by the participating countries. Pakistan’s case has not been discussed, though there are passing references to it.

Key takeaways from the edited volume are as follows:

a) A majority of the BRI borrowers were already in debt owed to Western countries, the Paris Club and US-dominated international financial institutions, such as the World Bank when they undertook BRI participation.

b) China’s share of debt is a recent development. In some countries, such as Cambodia, Chinese debt has been reduced and rescheduled through negotiation.

c) Several governments facing the challenge of financial crises have sought BRI loans. Some of these have made good use of these loans.

d) Most of the countries facing debt repayment issues have had political instability, rampant corruption and policy discontinuation.

e) The BRI debt trap theory is an Indian strategic plan to counter China’s rising influence.

f) Though the BRI has offered significant opportunities to many countries, its implementation is not without challenges, including accumulated debt in some countries including Pakistan.

As policy solutions, the authors recommend meaningful interaction and project-based negotiations between Chinese and other stakeholders.

The book carries valuable insights on debt issues and management. It is recommended for students, scholars and policy practitioners interested in the BRI, the CPEC, regional integration and trans-regional market connectivity.

The Reality and Myth of BRI’s Debt Trap

Evidence from Asia and Africa

Author: Edited by Nian Peng and Ming Yu Cheng

Publisher: Springer, 2024

Pages: 229

The reviewer has published on CPEC/ BRI in Chinese Political Science Review and Fudan Journal of the Humanities and Social Sciences. He is a DAAD, Fudan Development Institute and Fulbright fellow. He can be reached at ejaz.bhatty@gmail.com