China’s belt and road projects ‘narrow economic inequalities within countries’
Chinese development finance corresponds to rises in subnational GDP, suggests report by US researchers
Chinese infrastructure projects do help narrow economic inequalities within host countries even if they risk tempting them into possible debt traps, according to US researchers.
Beijing’s trillion-dollar “Belt and Road Initiative”, which aims to expand China’s trade routes around the globe, has attracted accusations of “white elephant” projects that are politically motivated and economically unsustainable.
In Sri Lanka, the indebted government has handed over its southern port of Hambantota to China on a 99-year lease, while the newly elected Malaysian government has dumped a Chinese high-speed rail plan that connects it to Singapore after saying it could not afford the cost.
However, amid international scrutiny of how cost-effective the Chinese projects are, AidData – a US-based project that tracks development assistance – has said Chinese government-financed connective infrastructure projects have been able to narrow economic disparities within a country in a way that traditional Western donors may have failed to achieve.
In its latest report, released on Tuesday, AidData tracked the economic growth impact in 138 countries of 3,485 infrastructure projects including airports, seaports and roads between 2000 and 2014.
They developed a measure of economic inequality by assessing growth using satellite data showing the geographical distribution of nighttime light from year to year, in more than 32,000 localities around the world. Nighttime light intensity is an indicator of aggregate economic activity – population density plus economic activity – measured by recorded light between 8.30pm and 9.30pm.
According to the study, many low- and middle-income countries suffer from high levels of spatial inequality, shown by excessive concentration of economic activity in a small number of urban centres and little economic activity in other towns and villages.
The study found that a 10 per cent increase in Chinese development finance corresponded on average to a 0.6-1.1 per cent increase in nighttime light output, roughly equivalent to a 0.2-0.3 per cent increase in subnational gross domestic product.
