Xi Jinping‘s One Belt, One Road initiative has raised many voices, inside China rather positive, outside China often sceptical. Financial analyst Sara Hsu looks at some details of the multiple trillions US dollar project and feels getting it right might be tough, whatever side you are on as financial checks and balances are lacking, she writes in the Huffington Post.
Chinese President Xi Jinping’s massive “One Belt, One Road” project is more expansive and inclusive than any other modern undertaking by a single country. If successful, it could transform the face of the developing world. But the endeavor has many potential pitfalls.
The Belt and Road initiative covers a huge part of the world and promises to thrust China into the center of the globalization process. Developing countries that lack infrastructure can theoretically obtain much-needed roads, railways and ports. The Belt and Road initiative could represent the most significant coordinated development undertaking in history.
The question, though, is if it will succeed. There appears to be insufficient due diligence in some cases, which carries political and financial risks. For example, work on the Colombo port project in Sri Lanka and a high-speed rail plan in Indonesia stalled due to local opposition. In other areas, like Gwadar in Pakistan, security is a major concern.
Projects funded by the Asian Infrastructure Investment Bank are more likely to be carefully weighed in terms of risk. By contrast, projects financed by the China Development Bank or the Export and Import Bank of China may undergo standard examination but, as part of an array of projects on the table, may be short-changed in full analysis and oversight…
The presence of risks does not mean that planned projects should be abandoned. However, investment could be more beneficial if the pace of implementation is slowed down and carefully overseen. Using a more cautious approach to political and financial risks during the planning stage can help ensure that Belt and Road projects come to fruition.
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