China’s Belt and Road Initiative (BRI) could speed up economic development and reduce poverty for dozens of developing nations, the World Bank said on Tuesday in a report that called for deep policy reforms and more transparency for the initiative.
The long-delayed report said that the initiative — a string of ports, railways, roads, bridges and other investments connecting China to Europe via central and southern Asia — could lift 32 million people out of moderate poverty conditions if implemented fully, the World Bank said.
Still, there are “significant risks,” it added.
“Achieving the ambitions of the Belt and Road Initiative will require equally ambitious reforms from participating countries,” World Bank vice president for equitable growth Ceyla Pazarbasioglu said in a statement.
“Improvements in data reporting and transparency — especially around debt — open government procurement, and adherence to the highest social and environmental standards will help significantly,” she added.
New World Bank president David Malpass in April skipped China’s second Belt and Road summit in Beijing to take his first foreign trip to Africa instead.
Malpass was a critic of the initiative when he was an official at the US Department of the Treasury, saying that it was saddling some nations with unsustainable debts.
The report found that for some countries, the costs of new infrastructure could outweigh potential economic gains and the benefits would be unevenly distributed among participating countries.
Real income gains in the Kyrgyz Republic, Pakistan and Thailand could be higher than 8 percent, but Azerbaijan, Mongolia and Tajikistan could experience negative welfare gains due to high infrastructure costs, the analysis showed.
Real income for Belt and Road corridor economies could be two to four times larger if they ease trade restrictions and institute reforms to reduce border delays, the World Bank said.
Increased private-sector participation in the project, now dominated by China’s state-owned banks and enterprises, could help sustain the initiative in the long run, but participating nations would need to institute reforms to improve their investment climates, including stronger legal protections and regulations, the report said.
“Little is known about the processes for selecting firms” for Belt and Road projects, the report said. “Moving toward international good practices such as open and transparent public procurement would increase the likelihood that BRI projects are allocated to the firms best placed to implement them.”
There was also a need to increase transparency of debt terms and conditions for projects to allow governments to assess the risks to their ability to sustain debt, the report said.
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