The flagship project was the China Pakistan Economic Corridor (CPEC), with
investments and loans said to be worth $60bn. It has produced a few badly needed
power stations, but has broadly fallen short. Projects are mothballed and debts are
being renegotiated. CPEC paid little heed to Pakistan’s precarious fiscal and balance-of-
payments position, or to its thorny politics. Almost none of the promised industrial co-
operation will happen. Far from transforming the relationship, CPEC has laid bare its
limitations.
Elsewhere, from Malaysia to Sri Lanka to the Maldives, the sheer scale of China’s
economic activities, and its coddling of corrupt leaders, have bred local resentment.
That, says Andrew Small of the German Marshall Fund of the United States, a
Washington think-tank, has undermined China’s economic and strategic goals. The
pandemic has only made things worse. Around the world, though usually out of sight,
China is having to roll over debts and ease the terms of many loans. In 2021 the
Chinese-led Asian Infrastructure Investment Bank will report more bad loans and even
face talk of its credit being downgraded. With lending cut back sharply, Chinese
infrastructure projects in poorer countries will be less prominent.
Yet reports of the BRI’s death from covid-19 are exaggerated, says Eyck Freymann,
author of a new book on the project. In the first half of 2021 it will get a big boost. If you
have not heard of China’s “health Silk Road”, you will soon. Think vaccine diplomacy.
China has already approved three vaccines for emergency use. With clinical trials under
way in Brazil and Pakistan, they may beat Western ones to market. They will also, says
Mr Freymann, be cheaper. An American vaccine, made by Moderna, could cost over $70
per treatment, more than developing countries can afford at scale. China is already
pushing one of its vaccines to BRI partners such as Mexico and the Philippines, along
with help to pay for it. There are regulatory and logistical challenges, and the vaccines
themselves may not prove to be effective. But Mr Xi hopes to help China escape its
reputation as a predatory lender, and as the source of the coronavirus itself, as he takes
credit for helping grateful countries along the Belt and Road.
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