China’s BRI crisis in South Asia

China Merchants Port Holdings, a state-owned Chinese port operator, withdrew from a proposed US$392 million joint venture to develop a logistics hub in Sri Lanka’s Port of Colombo this month, renewing questions about the viability of China’s Belt and Road Initiative (BRI) in South Asia. The development recalls the controversy surrounding Hambantota port, which Sri Lanka leased to a Chinese company for 99 years in 2017 amid mounting financial pressures.

However, the difficulties extend beyond Sri Lanka in South Asia and point to a common problem: the gap between the BRI’s promise of economic transformation and the conditions required to realize it. Pakistan provides the clearest illustration of this dilemma. The China-Pakistan Economic Corridor (CPEC) was designed to connect China’s Xinjiang region with Pakistan’s Arabian Sea coast through transport infrastructure, energy projects and the strategic Port of Gwadar. However, persistent economic instability, energy-sector liabilities and financing difficulties have complicated its implementation.

Security poses an additional obstacle. Attacks on Chinese nationals and projects, particularly in Balochistan, have increased the costs and risks of protecting Chinese investments. The broader lesson is that infrastructure investment does not automatically generate sufficient revenue to service debt or produce sustainable development. Although Pakistan remains strategically important to Beijing, close political relations have proved insufficient to guarantee the economic success of major infrastructure commitments.

Bangladesh illustrates the importance of domestic political change. Chinese investment has supported infrastructure and industrial development, making Beijing an important economic partner. However, the removal of Sheikh Hasina’s government in August 2024 created a new political environment for Dhaka’s external relationships. The implications for China’s position should not be overstated: Political change does not automatically mean that a country would abandon existing investments or partnerships. Nevertheless, it demonstrates that agreements reached under one government do not guarantee continuity of strategic priorities under its successors.

Bangladesh’s challenge is to retain the economic benefits of Chinese investment while diversifying its external partnerships and preserving diplomatic autonomy. Bangladeshi Prime Minister Tarique Rahman’s trip to Japan on Monday has added a new dimension to the evolving Bangladesh-China ties. For Beijing, the lesson is that access to political elites and strong relations with an incumbent government cannot substitute for broader political legitimacy or guarantee that its long-term interests would remain unaffected by domestic transitions.

Nepal reveals a different limitation: the difficulty of translating geographical proximity into practical connectivity. Its engagement with the BRI reflects an ambition to diversify transport and trade links beyond traditional routes through India. However, difficult Himalayan terrain, high infrastructure costs, financing questions and the practical challenges of cross-border transport have complicated this ambition. Nepal’s dependence on transit access through India also limits the extent to which Chinese connectivity projects can transform its economic geography in the short term.

Therefore the central challenge is not simply whether Nepal and China can reach political agreements, but whether those commitments can produce commercially viable, financially sustainable and operationally viable infrastructure. Announced projects and signed agreements should not be confused with completed transport links or economically productive connectivity. Nepal demonstrates that geography, costs and implementation capacity can constrain the strategic value of infrastructure even when political intentions are aligned.

The Maldives highlights the interaction between infrastructure investment, domestic politics and regional strategic competition. Chinese-backed infrastructure and closer diplomatic relations have become part of the country’s wider debate over foreign influence, economic dependence and national sovereignty. Changes in domestic political priorities can alter the emphasis of the Maldives’ external partnerships without necessarily producing a complete break with Beijing.

As a small island state situated in a strategically important part of the Indian Ocean, the Maldives must balance economic opportunities with the need to preserve its decisionmaking autonomy and maintain relations with competing regional powers, particularly India and China. Chinese investment can generate commercial opportunities and diplomatic access, but neither guarantees an uncontested sphere of influence. The Maldivian experience underlines the importance of local political choices in determining the durability of Beijing’s regional partnerships.

These cases reveal the limits of treating the BRI as a uniform model of regional development. Pakistan illustrates the interaction of economic vulnerability and insecurity; Sri Lanka highlights financial exposure and questions of commercial viability; Bangladesh demonstrates the significance of political transitions; Nepal exposes geographical and implementation constraints; and the Maldives shows how domestic politics and strategic balancing shape the influence that China can exercise. These differences matter as much as the similarities. They suggest that the BRI’s outcomes depend not only on the resources China commits, but also on recipient countries’ economic conditions, institutional capacities and political choices.

India’s opposition adds another dimension to Beijing’s difficulties. New Delhi rejects the CPEC because it traverses territories claimed by India and remains concerned about China’s expanding presence in its neighborhood and the Indian Ocean. India has sought to strengthen regional connectivity and economic partnerships, including through the India-Middle East-Europe Economic Corridor, announced in 2023. The BRI’s predicament in South Asia is best understood, hence, as a crisis of conversion: the difficulty of translating infrastructure investment into sustainable development and durable geopolitical influence. China remains a major regional actor, and not all of its projects have failed.

Moreover, the future of the BRI would depend less on the scale of Beijing’s commitments than on the value those commitments ultimately deliver.

Sumit Kumar is a Ministry of Foreign Affairs visiting fellow at National Chengchi University and an assistant professor in Delhi University’s Department of Political Science.