Recently, media commentary emerging from European countries suggested that the COVID-19 pandemic has caused a sharp reduction of Chinese investment in economies participating in the Belt and Road Initiative.

Some people continue to express concern over a perceived debt issue, while others sought to highlight that coal-fired power plants are being built under the BRI framework.

To be sure, there are others who have taken cognizance of the new economic development opportunities that the BRI would present now as well as in the future, once the dust of the pandemic settles.

A dispassionate overview of the topic, therefore, would be necessary to gain a proper perspective.

No debt trap for participants

In 2020, China's non-financial direct investment in the countries along the Belt and Road reached $17.79 billion, up more than 18 percent year-on-year.

From 2014 to 2020, China's non-financial direct investment into the countries along the Belt and Road reached $104.72 billion, with the annual average hitting $14.96 billion.

The ratio of China's outbound direct investment in the countries along the Belt and Road also increased to more than 16 percent of the country's total ODI in 2020, from less than 10 percent in 2013, when the BRI was first proposed.

No participating economy that undertook BRI-related construction projects has slipped into a debt crisis. Credit for that should go to the Chinese government's three principles relating to the joint projects:

First, China does not force any country to join the BRI. Nor does China force any participating country to borrow money from itself.

Second, all the investment projects are to be carried out by independent companies, as per the existing market rules, and thus government-to-government lending is rare and based on market mechanisms like international market financing and private-public partnership financing.

Third, all the BRI projects are development-oriented to ensure good returns on investment.

But, some critics are quick to cite the case of the Hambantota Port project in Sri Lanka. Not long ago, a senior Sri Lankan government officer went on record that the country's debt to China constitutes just 12 percent of Sri Lanka's total foreign debt.

As for the Hambantota Port project, China Merchants Group purely followed market rules to pick up a 70 percent stake, and to receive the nearby area on a 99-year lease to build an industrial park based on the principles of fair trade. This is actually the best way to pre-empt a debt crisis.

In 2017, 26 BRI-related countries signed an agreement with China on the "guiding principles of Belt and Road finance". In 2019, the "Belt and Road Debt Sustainability Framework" was published by China's Ministry of Finance, providing clear guidelines about the processes and standards of debt sustainability analysis, debt risk analysis, debt capacity pressure test, debt risk management, and so on, for the countries concerned.

Countries that were unable to repay debt at maturity found that China had never made things more difficult for them, but instead actively explored win-win resolution.

For instance, last year, the Chinese government had waived off interest-free loans offered to some African countries, when the loans matured in 2020. To ease the debt burden on developing countries caused by the COVID-19 pandemic, China actively responded to the G20 debt relief initiative, becoming the most generous country among G20 member countries.

Energy transition

China always pushes forward energy transition with relevant countries by generating more renewable energy to reduce carbon emissions. It also continually helps build some coal-fired power plants in some developing countries that have abundant coal resources. This helps lower electricity generation costs, while guaranteeing low-carbon and clean production processes through use of advanced technologies.

In fact, China has helped build many renewable power plants in BRI economies. The power plants already put into use have proved they deliver high economic and social efficiency.

Albeit the fact that China and Pakistan have agreed to build some coal-fired power plants, all these projects were carried out with the most advanced clean coal-fired technologies, to ensure effective control over emissions and energy costs.

In recent decades, China has sought to strictly limit generation of coal-fired energy both within the country and abroad. The "Guiding Opinions on Promoting Investment and Finance to Coping with Climate Change" has stated that any coal-related construction projects shall be strictly limited.

In 2020, the People's Bank of China, the central bank, also revised the "Green Bonds Endorsed Projects Catalogue" so that projects using traditional fossil energy would no longer be supported. Domestic pilot carbon market has traded over 400 million tons, becoming the second-largest carbon market in the world.