China’s Belt and Road Initiative in South Asia: An assessment and outlook

June 29, 2021

In a new MLI commentary titled “China’s Belt and Road Initiative in South Asia: An assessment and outlook,” Muhammad Faisal writes that, beyond an investment and infrastructure development strategy, the BRI is used to influence economically weaker countries and develop assets that help accomplish China’s greater geostrategic goals. The BRI has also been criticized for leveraging “debt trap diplomacy,” by which China develops assets in countries that it knows have limited long-term means to pay for them, thus incurring unsustainable levels of debt. As a result, host countries are eventually forced to forfeit the assets to Beijing.

In this context, South Asia is crucial for the BRI. South Asian countries need large amounts of infrastructure investment and are experiencing economic growth that China hopes to tap into. The region is also situated close to China and its large population centres.

Yet China has also begun to experience setbacks in South Asia. As Faisal notes, India in particular has been skeptical of China’s intentions with the BRI, leading to tensions with other smaller economies that Delhi sees as being within its sphere of influence. Additionally, Chinese investment into Pakistan has stalled. Despite some development successes, the Maldives and Sri Lanka confront rising debt levels that – being driven in part by the BRI – have made leaders in both countries increasingly wary of China’s true intentions.