Summary: a shift in China’s global economic approach hasn’t affected the Gulf states for now but there is no guarantee the status quo will stay in place.
We are grateful to Arab Digest member Jonathan Campbell-James for today’s commentary.
This content is locked
Login or Register To Unlock The Content!
I am not sure how much this applies to the Gulf region – or, indeed, to the wider Arab world (notably Egypt) but it may be worth noting that China’s BRI-related lending plummeted last year. According to independent analysis by the University of Boston the two primary state-owned lending vehicles, China Development Bank and Export-Import Bank of China, lent just USD4bn to BRI ‘beneficiaries’ last year as against a peak of USD75bn in 2016. As Jonathan rightly notes there is a “change of strategic direction” underway in Beijing. Concerns about debt sustainability across the board is certainly playing a part in this even if it is not an issue which is directly relevant where at least some of the MENA BRI partners are concerned. CSIS’s Jonathan Hillman is not alone in believing that China is at risk of finding itself at the centre of an emerging market debt crisis even on its lending to date unless it is prepared to accept some pretty dramatic changes to current repayment terms with a large number of BRI partners. It is, in any case, worth bearing in mind that the BRI is overwhelmingly an infrastructure investment project; and that, as Mr Hillman has noted, historically all too many such projects have ended in a big bust! Something which Beijing is at pains now to avoid for both economic and political reasons.