In 2013, China launched the Belt and Road Initiative (BRI) to realize the vision of revitalizing the ancient Silk Road. The BRI can be characterized as a vast infrastructure development initiative spanning over sixty-five countries that total almost half of the world's GDP. Since its launch, BRI projects have primarily been financed through commercial loans provided by Chinese banks, creating concerns over debt sustainability. At the top of these concerns are fears over whether participation in the BRI will lead to a "debt-trap scenaro." Public-Private Partnerships (PPPs) provide an alternative financing option. In project development under a PPP, particularly the Build-Own-Operate (BOT) and its variations, the private sector partner is responsible for financing the project, allowing governments to develop important infrastructure facilities without adding to public debt. However, only discrete assets in stand-alone projects have been developed in this manner. Since the BRI is a series of interconnected projects, exposure to project-to-project risk during the development and operation of the infrastrucuture facility can be severe. The BOT, along with many other PPP models, were not designed to absorb this level of project-to-project risk, which may contribute to its limited application within the BRI. This Note proposes the adoption of a BRI-unified framework and an idependent regulatory system to help provide more guidelines and oversight to BRI project development, which could have the effect of reducing project-to-project risk by creating more consistency and quality in PPP implementation. By mitigating this type of risk, PPPs could become a more attractive financing option. As a result, BRI debt sustainability levels could improve, and China could finally dispel the suspicion that the BRI is a thinly veiled form of "debt-trap" diplomacy.
August N. Dinwiddie,
China's Belt and Road Initiative: An Examination of Project Financing Issues and Alternatives,
45 Brook. J. Int'l L.
Available at: https://brooklynworks.brooklaw.edu/bjil/vol45/iss2/4
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