The Chinese Communist Party to Shrink the “Belt and Road” Project

The Chinese Communist Party (CCP) has spent trillions of dollars expanding its influence in Asia, Africa and Latin America through “the Belt and Road” infrastructure programs. Now, according to people involved in the decision-making, the CCP Government is making a drastic adjustment to the troubled program.

A slowing global economy, compounded by rising interest rates and soaring inflation, has made it difficult for many countries to repay debts borrowed from the CCP. Tens of billions of dollars in loans have turned bad, and many development projects have stalled. Western leaders have criticized the CCP’s lending practices, which some have dubbed “debt-trap diplomacy”, which embarrassed the CCP Government. Many economists and investors have said that CCP’s lending operations helped fuel debt crises in places like Sri Lanka and Zambia.

After nearly a decade of pressuring domestic banks to lend generously, Chinese policymakers are now discussing a more conservative plan, known in internal discussions as “the Belt and Road 2.0”, and the new version of the plan will more rigorously evaluate new loan projects, the people said. They will also re-open previously reluctant talks on loan losses and debt restructuring.