In this episode of the ChinaPower Podcast, Dr. Agatha Kratz joins us to discuss how the Covid-19 pandemic has affected China’s Belt and Road Initiative (BRI). Dr. Kratz provides background on the history and past successes of the BRI from 2013-2020. She argues that, prior to the pandemic, China’s BRI was at a low point. There were fewer contracts and increased scrutiny on past unsustainable projects and loans. Dr. Kratz contends that those pre-existing trends were further accentuated by the Covid-19 travel restrictions, deteriorated financial conditions, and disruptions in trade. Nonetheless, she explains, new BRI projects have arisen as a result of the pandemic, such as the “Health Silk Road”. 

Lastly, Dr. Kratz identifies the core problem with the BRI to be the long-lasting debt – which can lead to debt crises – in recipient countries. China’s common practice of debt renegotiations, rather than debt forgiveness, creates a further disincentive. Together, they slow the appetite for further BRI projects. Alternatively, she explains, recipient countries have begun to seek more sustainable and profitable projects.

Dr. Agatha Kratz is an Associate Director at Rhodium Group, where she coordinates European activities and leads research on European Union-China relations and China’s commercial diplomacy. She also contributes to Rhodium’s work on China’s global investment, industrial policy, and technology aspirations. Dr. Kratz is a non-resident Adjunct Fellow of the Reconnecting Asia Project at the Center for Strategic and International Studies under the Simon Chair in Political Economy.