Summarised by Centrist
New Zealand faces an infrastructure deficit, commonly said to be over $100b. China’s Belt and Road Initiative (BRI) offers potential solutions, but there’s definitely risks.
Just ask Sri Lanka.
In the report, Belt and Road Initiative – Implications for New Zealand, authors Nick Clark and Dr Oliver Hartwich of the New Zealand Initiative argue that BRI participation could boost trade and infrastructure, but unsustainable debt makes it a gamble.
New Zealand must watch out for “debt-trap diplomacy”. This refers to a strategy used by some countries, particularly China. Loans are extended to other countries with the aim of gaining strategic advantages when the borrowing country is unable to repay the debt.
In their report, Clark and Hartwich warn of the experiences of other BRI participant countries like Laos and Pakistan. In particular, the authors note:
“The case of Sri Lanka handing over the Hambantota Port on a 99-year lease to China after failing to meet its debt obligations is often cited as a prime example of this phenomenon.”
They recommend that instead of deepening its involvement in the BRI, New Zealand should focus on reducing barriers to investment, improving funding arrangements, and collaborating with other democracies to promote best infrastructure practices.
