How Does the “Belt and Road” Initiative Affect Debt Sustainability?

Abstract

The Belt and Road Initiative (BRI) has opened new financing channels, promoting sustainable debt management and high-quality economic growth in China and BRI-participating countries. This paper, using sample data from 64 BRI-participating countries and 40 non-BRI countries from 2002–2021, employs the difference-in-differences (DiD) method to examine BRI impacts on government debt sustainability. Empirical results passing robustness tests reveal heterogeneous effects. Findings indicate: first, the BRI enhances government debt sustainability in participating countries; second, government spending, foreign direct investment, and international trade moderate economic development; third, the BRI exhibits heterogeneity by income, debt levels, and growth rates. The study demonstrates the BRI alleviates “debt anxiety” and injects new momentum into global economic governance system improvement and innovation, ensuring stable macroeconomic operation and high-quality economic growth.