ASIA ─ The rise of China from being called a “Sleeping Giant” into its current stature on the global scene as an economic powerhouse and a military superpower is one of the most transformational and consequential events that took place in the 21st century. China, without a doubt, tipped off the global socio-political and economic balance in the post-cold war era ─ catapulting a new player that is on par and stands side-by-side with the two rivaling superpowers, Russia and the US.

Thus, with its own political and economic interests in mind, as well as its ambition to be the world’s leading economy, the second-largest economy has introduced the “Belt and Road Initiative (BRI)” for the world to see. The “project of the century,” as dubbed by Chinese President Xi Jinping, leverages the country’s strong balance sheet to finance big-ticket projects of many developing countries worldwide. However, more strings could be attached beyond the BRI contracts that could give China invaluable political leverage on countries that experience difficulty meeting their financial obligations.

Central Asia on a Lifeline

The BRI is currently the world’s largest infrastructure project a single country has undertaken. According to the Green Finance and Development Center at Fudan University, Shanghai, since the introduction of BRI in 2013, an unprecedented $932 Billion has been given out as foreign loans, making China the world’s largest bilateral lender.

For eight years now, multiple Central Asian economies have taken out massive loans to support some of their most ambitious infrastructure projects. These include volatile economies ─ Pakistan, Kyrgyzstan, Tajikistan, and Iran.

When Sri Lanka’s economy fell apart, and its President was forced to leave the country due to mass unrest, Central Asian economies paid close attention as some of the issues that contributed to the South Asian country’s economic crisis were already present and closing in on the region. Furthermore, Sri Lanka defaulted on its massive accumulated foreign loans that stand at more than $50 Billion, $5 Billion of which came from China.

However, even before Sri Lanka’s economy plummeted, Akylbek Japarov, the chairman of Kyrgyzstan’s Cabinet of Ministers, warned its country in the parliamentary session in late June that the situation in Sri Lanka could also materialize in the country, saying, “We must always remember the need to pay [our] public debt.” Japarov continued, “I’m not scaremongering, but if we do not pay this debt, [China’s] Export-Import Bank can take over [projects]. This has already been [discussed] in cases in Pakistan, Sri Lanka, and other countries. We cannot sit back and rely only on [God]. We all need to unite in order to maintain our independence.”

In the case of Pakistan, it is even worse, as it is projected to be the first “domino to fall” following Sri Lanka. Moreover, the country is the largest single recipient of BRI worldwide, with an outstanding $62 billion pending collection from the China-Pakistan Economic Corridor (CPEC) infrastructure projects.

Defaulting is the Worst-Case Scenario

From the Kyrgyz President himself, Japarov warned that the consequence of not meeting its financial obligations could be disastrous. Last year, when it seemed that it would not be able to pay its dues, a discussion of handing over the rights of one of its largest iron ore mines, the Jetim-Too, as well as the Bishkek thermal power plant to the Chinese Government was discussed to fulfill Kyrgyzstan’s obligations. This year, the possibility of these takeovers remains, and as such, Japarov wanted to make sure that this would not happen at all cost. He vowed that all foreign debt repayment would not be delayed even for “one hour.”

Thus, China’s power to cease control of these foreign mega-projects poses a severe economic and security threat to defaulting countries. The superpower is in its best interest to maintain financial pressure on these economies to get firm political leverage and, inadvertently, could dictate where a dire country’s future is heading.