“Beijing’s international lending programme has soared to record levels because of domestic challenges – specifically, an oversupply of foreign currency, high levels of industrial overproduction and the need to secure national resources that the country lacks in sufficient quantities at home,” it said.

But the report said China would need to address concerns from countries taking part in its belt and road programme, including over implementation issues and Chinese debt burdens that had been “substantially larger” than previously understood. This would be critical, particularly as the belt and road faced more competition in the future. In June, the US and its allies announced their green development alternative, the Build Back Better World (B3W) initiative, at the G7 summit.

China’s belt and road has been a key initiative for Beijing in securing strategic overseas resources and is a pet project for China’s President Xi Jinping, but it has sparked concerns from countries such as the US over debt levels for developing countries and that the programme has allowed Beijing to cultivate greater influence across Asia, Africa, Latin America, Europe and the Middle East.

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Under belt and road, China’s overseas funding has also been bigger and riskier, the report found. The number of big-ticket projects – ones requiring loans of US$500 million or more – tripled each year in the first five years of the initiative, compared to the pre-BRI era. A higher proportion of China’s lending has gone to countries with lower than average rankings on the World Bank’s control of corruption index, and those that perform worse on creditworthiness. More state-owned commercial banks are taking part in the lending, and have relied on tools such as collateralisation – using an asset to secure a loan – to mitigate risks.

There were also issues with the implementation of belt and road projects, compared to other projects funded by the Chinese government outside the development scheme, the report said. Researchers found that 35 per cent of BRI infrastructure projects faced major issues, such as corruption scandals, labour violations, environmental hazards and public protests, compared to only 21 per cent for China’s non-BRI infrastructure projects. It also took an average 1,047 days to implement BRI projects, compared to 771 days for Chinese government-financed projects outside the belt and road programme.

“Beijing has witnessed more project suspensions and cancellations during the BRI era than it did during the pre-BRI era,” it said. “Host country policymakers are mothballing high-profile BRI projects because of corruption and overpricing concerns, as well as major changes in public sentiment that make it difficult to maintain close relations with China.”

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As the US and its allies push its B3W alternative to the Belt and Road Initiative, the report said Beijing would need to take new steps to reform its scheme. This could see it seek public support in BRI countries, ingratiate itself with incumbent leaders in BRI countries or seek to multilateralise its initiative by co-financing and implementing infrastructure projects with multilateral development institutions that have higher standards and safeguards.

“It remains to be seen if ‘buyer’s remorse’ among BRI participant countries will undermine the long-run sustainability of China’s global infrastructure initiative,” the AidData report said. “However, it is increasingly clear that Beijing will need to address the concerns of host countries in order to sustain support for the BRI.”