China's Belt and Road Initiative (BRI) is running into mounting headwinds across South Asia, stymied by a combination of economic instability, political transitions, security threats and difficult geography, according to a new report by Mekong News. The findings draw on a string of recent setbacks, most notably the withdrawal of state-owned China Merchants Port Holdings from a $392 million joint venture to develop a logistics hub at Sri Lanka's Port of Colombo.

Sri Lanka: A Cautionary Tale of Withdrawal

The exit of China Merchants Port Holdings from the Colombo logistics project has revived uncomfortable questions about the BRI's ability to translate large-scale infrastructure pledges into sustainable development outcomes, the report noted. The withdrawal drew fresh comparisons with Sri Lanka's Hambantota Port, which was leased to a Chinese company for 99 years in 2017 after the island nation struggled under mounting debt pressures — a deal that became one of the most cited examples globally of so-called 'debt-trap diplomacy', though analysts remain divided on that characterisation.

CPEC: Security and Debt Liabilities Cloud Pakistan Corridor

The China-Pakistan Economic Corridor (CPEC), designed to link China's Xinjiang region with Pakistan's Arabian Sea coast via transport and energy infrastructure anchored at Gwadar Port, has faced compounding difficulties. Economic instability, unresolved energy-sector liabilities and persistent security threats — including attacks on Chinese nationals and project sites — have complicated implementation, the report said. 'The broader lesson is that infrastructure investment does not automatically generate sufficient revenue to service debt or produce sustainable development,' the report stated. 'Although Pakistan remains strategically important to Beijing, close political relations have proved insufficient to guarantee the economic success of major infrastructure commitments.'

Nepal and Bangladesh: Terrain, Financing and Political Flux

In Nepal, the formidable Himalayan terrain has driven up infrastructure costs sharply, while financing concerns and practical cross-border connectivity challenges have stalled ambitions to diversify trade and transport links under the BRI framework. In Bangladesh, the report pointed to how political transitions can fundamentally reshape long-term infrastructure and investment relationships. Though Chinese capital has played a significant role in supporting Bangladeshi infrastructure and industrial development, shifts in the political landscape have demonstrated that strategic priorities can pivot with incoming governments. Bangladeshi Prime Minister Tarique Rahman's recent trip to Japan was cited as evidence that bilateral ties with a previous government are no substitute for broader political legitimacy or durable long-term interests.

Maldives: Sovereignty Debate at the Centre

In the Maldives, Chinese-backed infrastructure projects and closer diplomatic ties have become flashpoints in a wider national debate over foreign influence, economic dependence and sovereignty. '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 decision-making autonomy and maintain relations with competing regional powers, particularly India and China,' the report noted. This comes amid a broader Indo-Pacific realignment, where smaller nations are increasingly scrutinising the terms attached to large infrastructure financing.

The Pattern Across the Region

Taken together, the BRI's South Asian trajectory reveals a persistent gap between Beijing's headline investment commitments and on-the-ground implementation realities. Each country presents a distinct set of complications — debt sustainability in Sri Lanka, security volatility in Pakistan, topographic and financing barriers in Nepal, political transitions in Bangladesh, and sovereignty sensitivities in the Maldives. The Mekong News report suggests that geopolitical proximity to China has not been sufficient to insulate BRI projects from these structural vulnerabilities. How Beijing recalibrates its approach across the region will be closely watched.