IMF Managing Director Christine Lagarde talked about China’s “One Belt, One Road” initiative at a conference in Beijing today. She acknowledged the potential of the initiative as a “platform for international cooperation” and there were already “signs of progress”. Nonetheless, Lagarde also warned of two challenges.
Firstly, she urged that Belt and Road “Only travels where it is needed”. She pointed to global experience of “failed projects” and “misuse of funds”. Also, Chinese and other companies involved in construction overseas may face “new political, legal, and environmental obstacles”. Secondly, she warned that the Belt and Road ventures can “problematic increase in debt”. And that could potentially limit other spending as debt service rises and create “balance of payment challenges”.
