China's Bungled Overseas Loans Reveal a Key Weakness
The nation's vaunted Belt and Road Project was meant to build influence around the world. Instead, it's stirred resentment.
A Chinese-funded project for Port City, in Sri Lanka
Photographer: Ishara S. Kodikara/AFP via Getty Images
China’s economic model is going to be tough to beat. While the USSR’s dysfunctional communist system made it ultimately a paper tiger, China is building a state capitalist system that will prove more robust and competitive. But there is one way in which China’s model is already showing signs of weakness: It’s having difficulty investing overseas.
A recent Financial Times article noted that bilateral lending by Chinese state banks to countries involved in China’s “Belt and Road” project has fallen dramatically in recent years. As many were quick to point out, that’s not the whole story, as China engages in other types of lending as well. But it’s undeniable that the program has run into deep trouble, along with many of the associated loans.