Controversies Around Debt Relief Calls for Projects in China’s Belt & Road Initiative

Several of the 126 countries participating in the Belt and Road Initiative (BRI) are calling for debt relief, including for infrastructure projects that have been hit by negative economic effects of the COVID-19 pandemic. A range of BRI projects, such as coal-fired power plants, hydropower plants, and oil palm plantations, has been criticized for their adverse environmental, climate, and social impacts. Subsequently, 260 environmental organizations requested in April 2020 that the Chinese government should not bail out 60 of these criticized projects.

Certainly, greening the BRI is a worthwhile effort that necessitates the incorporation of sustainability standards into early design and planning phases for envisioned infrastructure projects to protect the environment and the climate. In addition, a clear commitment for environmental sustainability by the Chinese Government, Chinese financing institutions as well as host countries of BRI projects is needed. However, in light of the intensifying economic recession and decreasing fiscal space of several BRI-participating countries, is it a timely and sustainability enhancing recommendation towards the Chinese Government to not support the bailing out of assets that risk to go bankrupt and hence embrace the possibility that BRI-participating countries will face even more fiscal stress?