China's BRI faces downturn over debt concerns
London
China's Belt and Road Initiative (BRI) is facing a downturn as multiple countries withdraw or scale back their participation over concerns about sovereignty, debt sustainability, surveillance risks, and overreliance on Beijing.
Notably, allies such as Pakistan and Myanmar have reassessed their involvement—a major blow to the megaproject that China has used to pursue political, economic, and military interests.
Panama is the latest country to officially leave the BRI, having issued the required 90-day notice. The first Latin American nation to join the initiative in 2017, Panama questioned the benefits it had gained. 'What has it brought to Panama all these years?' President José Raúl Mulino asked.
Losing Panama means China loses easier access to the Panama Canal, one of the world's most vital maritime trade chokepoints, and a strategic foothold in the Western Hemisphere near the US. While Beijing expressed regret and urged Panama to reconsider, Chinese officials failed to provide clear examples of benefits delivered under the BRI.
Brazil, Latin America's largest economy, has consistently declined to join despite China's appeals. Celso Amorim, Special Presidential Adviser for International Affairs, said Brazil did not want BRI to serve as an 'insurance policy' and refused to enter into a treaty.
Brazil is now the second BRICS member after India to reject the BRI, a move some analysts believe contributed to President Xi Jinping skipping the recent BRICS Summit in Rio de Janeiro.
Italy was the first G7 country to join the BRI in 2019 but has since withdrawn. Italian Prime Minister Giorgia Meloni, a longtime critic who called the move a 'serious mistake,' led Italy's exit after concluding the country saw little economic benefit while China gained political influence. Italian Defence Minister Guido Crosetto described joining the BRI as an 'improvised and atrocious act.'
The European Union as a whole has taken a cautious stance, viewing the BRI as a tool for China to advance industrial, and military aims.
European Commission President Ursula von der Leyen warned that the Chinese Communist Party's goal is a systemic transformation of the international order with China at its centre, citing the BRI as part of that effort.
In Asia, the Philippines withdrew from BRI projects in 2023 over security, economic, and geopolitical concerns. Critics cited unfavourable loan terms, lack of Chinese financial commitment, and fears of unsustainable debt.
'These decisions can be assumed to be motivated by concerns over sustainability and Beijing's unwillingness to act like a responsible neighbour,' said Don McLain Gill, a geopolitical analyst at De La Salle University in Manila.
Pakistan has been among the hardest-hit BRI partners. Many projects under the China-Pakistan Economic Corridor (CPEC) failed to deliver promised returns or even operate as intended. Islamabad has had to scrap metro lines and coal-powered plants while delays led to major cost overruns.
The country's mounting debt to China made Beijing its largest external creditor. Genevieve Donnellon-May, a geopolitical adviser, noted that China's loans have faced increasing scrutiny for exacerbating Pakistan's debt burden and fueling accusations of 'debt trap diplomacy.'
Sri Lanka has shelved or cancelled several BRI projects due to heavy repayment obligations. Myanmar scaled back its participation years ago after watching Sri Lanka lose control of its Hambantota Port to China under debt pressure.
'Lessons that we learned from our neighbouring countries show that over-investment is not good sometimes,' said Soe Win, Myanmar's former planning minister and current deputy prime minister.
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