With Washington’s retreat from regions like Africa, Southeast Asia, and Latin America, China is stepping decisively into the vacuum
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DRAZEN JORGIC
China’s leaders are working flat out to revive the Dragon Kingdom’s sputtering economy and return it to the high-growth trajectory it enjoyed over the last three decades. They’re doing it on a massive scale, pouring $124 billion into the global Belt and Road Initiative (BRI) in just the first six months of 2025.
The BRI was launched in 2013 as a grand vision of cross-border infrastructure and connectivity. It’s now entering a second phase that is bigger, broader, and riskier. This push comes as the US, long a major force in development funding, is turning inward.
With Washington’s retreat from regions like Africa, Southeast Asia, and Latin America, China is stepping decisively into the vacuum, using economic muscle to build influence and bind developing nations closer.
Even in Pakistan, where previous BRI phases encountered significant repayment problems, China is forging ahead with what has been dubbed CPEC 2.0 (China-Pakistan Economic Corridor). Pakistan has presented a wishlist of 60 new projects, and China is cherry-picking the ones it finds most appealing. Conservative estimates place the cost at $35 billion by 2030, though the figure could rise to $60 billion.
China’s aims are both strategic and economic. From energy and technology to railways, ports, and mining, China is investing across sectors. It’s pouring $7 billion into renewables like wind, solar, and waste-to-energy, while still backing coal-mining infrastructure pragmatically.
The most ambitious BRI projects are now happening in Central Asia and Africa, where US influence has waned significantly. In Central Asia alone, China has initiated 261 projects over the years, including the crucial China-Kyrgyzstan-Uzbekistan railway, a game-changer for landlocked economies. In Kyrgyzstan, the railway would connect the north and south. For Beijing, this line opens up new corridors to global markets.
In Africa, China is spending heavily, particularly in Nigeria. Last year, it signed a $1.2-billion deal to revive a gas processing plant that could transform Nigeria into a major aluminium exporter. It is also building major infrastructure, including the 203 km Kano-Kaduna railway and the Lekki deep-sea port in Lagos State.
Back in Pakistan, Chinese companies have had to adjust expectations. Originally, the CPEC vision included ambitious ventures in agriculture and fisheries, but Chinese companies quickly found progress in Pakistan moves at a different pace and must account for governance issues and terrorism threats. China also learned Pakistan’s repayment capacity was limited. As a result, CPEC has been scaled back to focus primarily on hydro and thermal power projects, some of which are already facing financial headwinds.
Still, both countries are now eyeing more ambitious initiatives. One is upgrading Pakistan’s vital economic rail artery, the M-1 (Mainline-1) from Karachi to Lahore and Peshawar. The first phase, from Karachi to Multan, was meant to begin months after the deal was signed last year, but it still awaits key clearances. With costs likely to exceed $6 billion, Pakistan’s economic fragility poses a major obstacle.
While the strategic value of M-1’s potential to transform Pakistan’s transportation infrastructure is clear, other Chinese-backed ventures have become glaring white elephants. Take the Chinese-built New Gwadar International Airport (NGIA). It boasts a runway long enough for an Airbus A380, yet sees only three flights a week. Whether this vision came from Chinese or Pakistani planners is unclear, but the result mirrors Sri Lanka’s under-used Hambantota Airport, another grandiose project now run by Indian and Russian firms under a 30-year lease after financial collapse.
On commercial terms
This illustrates a broader challenge with BRI: these aren’t concessional aid projects with generous loan terms. They’re commercial investments demanding returns. Uganda may struggle to meet interest payments on its port deal. Ethiopia’s Addis Ababa–Djibouti rail revenues are falling short. Laos had to borrow $1.9 billion for the China-Laos Railway, a burden its small economy is struggling to bear. Similar issues plague Kenya’s Standard Gauge Railway as well as Malaysian and Argentine rail projects.
One notable change in BRI 2.0 is the growing role of China’s private sector, which is now leading many projects. This adds another layer of complexity and risk, as private firms tend to be even more profit-driven than state-owned enterprises. Unlike traditional Western aid, BRI loans come on commercial terms. When things go wrong, there are no write-offs.
So, will China’s vast investments reshape the Global South and elevate its status to benefactor of developing nations — a shrewd response to US withdrawal? Or will these ventures turn into colossal debt traps, forcing countries to cede strategic assets as happened in Hambantota? If overambitious projects collapse, China may find that influence built on debt can just as easily dissolve into resentment.
Published on July 30, 2025