ISAS Insights

Moody's downgrade of China's currency ratings has refocused attention on the pitfalls of high public debt in China. Apart from long-term macroeconomic risks, rising indebtedness has serious implications for China's ability to invest in the overseas projects it has committed to. This paper studies the implications in the context of the Belt and Road Initiative (BRI) from a South Asian perspective. It argues investments under the BRI in recipient South Asian countries might be affected and new conditionalities for ongoing projects might be insisted as China struggles to balance conflicting goals of reducing debt and sustaining external investments