With more than half of its loans now in repayment, China is facing the fallout from the lack of guardrails in place at the outset of its Belt and Road Initiative….reports Asian Lite News
China is revamping the Belt and Road Initiative, which has pumped billions of dollars in grants and loans into developing countries over the last ten years. This comes as the country attempts to rein in the risks that plagued its earlier investments, according to a new report released on Monday, The Hill reported.
China has shifted its attention to reducing the risk of not being repaid, its exposure to environmental, social, or governance (ESG) factors, and potential damage to its reputation in the developing world, the report from AidData, a research lab at William & Mary, found.
The report said: “Beijing has launched a far-reaching effort to de-risk the (Belt and Road Initiative) by refocusing its time, money, and attention on distressed borrowers, troubled projects, and sources of public backlash in the Global South.”
“It is learning from its mistakes and becoming an increasingly adept international crisis manager,” it added.
With more than half of its loans now in repayment, China is facing the fallout from the lack of guardrails in place at the outset of its Belt and Road Initiative. About 19 per cent of borrowers had fallen behind on repayments as of 2021, up from seven per cent in 2000, according to the report, The Hill reported.
Beijing is thus shifting away from infrastructure project lending — once a central feature of its initiative — and moving towards emergency rescue lending to ensure its borrowers “have enough cash on hand to service their outstanding infrastructure project debts,” the report said.
The country has also sought to put in place more stringent ESG safeguards, with the risk prevalence rate in the country’s infrastructure project portfolio falling from 63 per cent in 2018 to 33 per cent in 2021, according to the report.
This shift comes as the US and its allies have ramped up their own lending to the developing world in recent years in an effort to compete with Beijing. In 2021, America committed USD 61 billion to low- and middle-income countries, narrowing the gap with China, as per The Hill.
Beijing has also pulled back slightly on its investments in developing countries. It committed USD 79 billion to low- and middle-income countries in 2021, down from an average of USD 117 billion a year between 2013 and 2017.
However, the report warned that Western nations don’t “seem to have a good understanding” of the recent changes China has made to its Belt and Road Initiative.
“Consequently, those who make and shape policy in Washington, London, Paris, Berlin, Tokyo, Rome, and Ottawa increasingly run the risk of competing with a version of the BRI that no longer exists,” the report noted, as per The Hill. (ANI)
The move has led to a new low point in Philippine-China relations, marking a drastic reversal from the six years of warm engagement during the pro-Beijing Rodrigo Duterte presidency.
In a significant development with geopolitical implications, the full termination of major infrastructure projects under the Belt and Road Initiative (BRI) has been announced by the Philippine Department of Transportation in favour of competitors from the West and Japan, as reported by Asia Times on Thursday.
As per the Philippine Senate, doubt now shrouds nearly all of China’s crucial investment initiatives in the Philippines, owing to economic and political factors. This has led to a new low point in Philippine-China relations, marking a drastic reversal from the six years of warm engagement during the pro-Beijing Rodrigo Duterte presidency.
China’s diplomatic approach in the Philippines under President Duterte faced criticism for being dubbed “pledge trap” diplomacy, involving substantial investments in exchange for concessions in the South China Sea. However, a vast majority of the promised $24 billion in infrastructure projects failed to materialise, as reported by Asia Times.
In the aftermath of a recent collision between Chinese and Philippine sea vessels, U.S. President Joe Biden made it explicit that, in adherence to the terms of the Philippine-U.S. Mutual Defense Treaty (MDT), the United States will respond to any attack on Philippine ships, aircraft, or soldiers stationed in the South China Sea.
The Philippines’ apparent departure from the BRI is rooted in deep-seated bilateral issues concerning contested territories in the South China Sea. The Marcos Jr. government recently voiced its concerns regarding China’s intimidation of Philippine patrol and resupply missions in and around the Second Thomas Shoal, where Manila maintains troops stationed on a grounded ship, Asia Times reported.
Shortly after the collision, Philippine Transportation Secretary Jaime Batista announced the scrapping of $4.9 billion worth of Chinese major infrastructure projects, which included two railway projects in Luzon and another in Duterte’s home island of Mindanao.
The aerial photo shows a Fuxing bullet train running on the Yuanjiang bridge of the China-Laos Railway in southwest China’s Yunnan Province. (Xinhua_Hu Chao)
“We have three projects that won’t be funded by the Chinese government anymore. We can’t wait forever, and it seems like China isn’t that interested anymore,” Batista disclosed during a forum organized by European investors in Manila. The Philippines is now seeking alternative, more favourable deals from traditional investment partners like Japan, South Korea, the U.S., and the European Union.
According to Philippine Senator Sherwin Gatchalian, up to six significant Chinese projects are now under “reconsideration” due to Chinese delays, concerns over lending terms, and broader geopolitical tensions, Asia Times reported.
A number of Chinese projects are expected to be put on hold in Manila, including the Mindanao Railway Project Tagum-Davao-Digos segment, the Chico River Pump Irrigation Project, the New Centennial Water Source – Kaliwa Dam Project, the Samal Island-Davao City Connector project, and a closed-circuit television project in multiple cities throughout Metro-Manila.
Filipino officials have expressed dissatisfaction with the perceived exorbitant terms and lack of financial commitment associated with Chinese-funded projects when compared to Japan’s concessional loan programs. Japan is presently engaged in several significant “connectivity” projects in the nation’s industrialized regions, in addition to a multibillion-dollar metro project in Manila.
Current statistics indicate that China’s entire BRI-related operations have decreased by approximately 40% since their peak in 2018. This can be attributed, in part, to legislative obstacles, financial fragility in various recipient nations, and Beijing’s diminishing financing.
According to a recent Boston University study, “many of the recipients of Chinese finance are subject to significant debt distress,” even though China’s development finance institutions provided partner states with over $331 billion between 2013 and 2021.
By some accounts, China spent as much as $240 billion to bail out BRI recipient nations on the verge of bankruptcy, most notably in the cases of Sri Lanka and increasingly in Pakistan and Laos.
The heightened tensions in the South China Sea between China and the Philippines have coincided with a significant decline in bilateral investment deals. While Beijing maintains a considerable advantage in two-way trade between the two neighbours, almost all of the infrastructure investment commitments made by Beijing during the Duterte administration are now in jeopardy.
This shift in the Philippines’ approach to the BRI reflects not only geopolitical considerations but also concerns regarding China’s economic slowdown, property market crises, and challenges associated with investments abroad. (ANI)
Ras Al Khaimah Ruler His Highness Sheikh Saud bin Saqr Al Qasimi led the UAE delegation to the Belt and Road Forum….reports Asian Lite News
The United Arab Emirates is participating in celebrating the 10th anniversary of the launch of the Belt and Road Initiative (BRI), initiated by Chinese President Xi Jinping in 2013, and the collective cooperation with more than 152 countries worldwide.
On behalf of UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan, Ras Al Khaimah Ruler His Highness Sheikh Saud bin Saqr Al Qasimi leads the UAE delegation to the third Belt and Road Forum for International Cooperation, in Bejing, under the theme: ‘High Quality Belt and Road Cooperation: Together for Common Development and Prosperity’.
Sheikh Saud was accompanied by the UAE delegation participating in the Forum, including: Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology, UAE Special Envoy for Climate Change; Sheikh Salem bin Khalid Al Qassimi, Minister of Culture and Youth; Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade; Dr. Ahmad bin Abdullah Humaid Belhoul Al Falasi, Minister of Education; Hussain bin Ibrahim Al Hammadi, UAE Ambassador to the People’s Republic of China, and several other officials.
The Forum, marking the 10th anniversary of the Belt and Road Initiative (BRI), with the participation of more than 130 countries and several international organizations, will discuss a range of topics, including connectivity, green development and digital economy, alongside forums on trade connectivity, intercultural exchange, think tanks, and transnational, subnational and maritime cooperation.
The UAE has invested $10 billion in a joint China-UAE investment fund to support BRI projects in East Africa. In 2018, the UAE signed 13 memorandums of understanding with China to invest in multiple sectors in the UAE. The UAE is also a founding member of the Asian Infrastructure Investment Bank.
The UAE’s trade with countries in Asia, Africa, and Europe reached around $560 billion in 2022, accounting for 90% of the UAE’s non-oil trade. China, India, Saudi Arabia, Iraq, Turkiye, Japan, Oman, Kuwait, and Hong Kong are among the UAE’s top 10 trading partners. The UAE’s non-oil trade with these countries grew by 20% in 2022 compared to 2021.
Data from the first half of 2023 shows that the value of the UAE’s non-oil trade with countries participating in the BRI reached $305 billion, accounting for 90% of the UAE’s non-oil trade during that period. The trade grew by more than 13% compared to the first half of 2022.
Moreover, a remarkable 88% of the UAE’s imports originate from countries actively involved in the Belt and Road Initiative (BRI), while 94% of the UAE’s non-oil exports are destined for these nations, and 92% of its re-exports are directed to them. These statistics constitute a vital underpinning for the successful implementation of the BRI in collaboration with all the countries contributing to the reinvigoration of trade among the regions, spanning Asia, Africa, and Europe.
Xi’s Steps For High-Quality BRI
Chinese President Xi Jinping on Wednesday announced eight major steps China will take to support high-quality Belt and Road cooperation.
First, China will build a multidimensional Belt and Road connectivity network, Xi said in a keynote speech at the opening ceremony of the third Belt and Road Forum for International Cooperation (BRF).
“We will vigorously integrate ports, shipping and trading services under the ‘Silk Road Maritime,’ and accelerate the building of the New International Land-Sea Trade Corridor and the Air Silk Road,” he said.
Second, China will support an open world economy, with its total trade in goods and services expected to exceed 32 trillion U.S. dollars and 5 trillion U.S. dollars respectively in the 2024-2028 period, Xi said.
He said the country will establish pilot zones for Silk Road e-commerce cooperation, and enter into free trade agreements and investment protection treaties with more countries.
The country will remove all restrictions on foreign investment access in the manufacturing sector, he said.
Third, China will carry out practical cooperation for the BRI. The country will promote both signature projects and “small yet smart” livelihood programs, the president said.
He vowed more financing support for BRI projects on the basis of market and business operation, noting that the China Development Bank and the Export-Import Bank of China will each set up a 350 billion yuan (48.75 billion U.S. dollars) financing window, and that an additional 80 billion yuan will be injected into the Silk Road Fund.
Fourth, China will continue to promote green development. The country will further deepen cooperation in areas such as green infrastructure, green energy and green transportation, and step up support for the BRI International Green Development Coalition.
Xi said China will implement the Green Investment Principles for the Belt and Road, and provide 100,000 training opportunities for partner countries by 2030.
Fifth, China will continue to advance scientific and technological innovation. China will continue to implement the Belt and Road Science, Technology and Innovation Cooperation Action Plan, and hold the first Belt and Road Conference on Science and Technology Exchange, noted Xi.
Sixth, China will support people-to-people exchanges. China will host the Liangzhu Forum to enhance dialogue on civilizations with BRI partner countries, the president said.
Seventh, China will promote integrity-based Belt and Road cooperation.
Together with its cooperation partners, China will release the Achievements and Prospects of Belt and Road Integrity Building and the High-Level Principles on Belt and Road Integrity Building, and establish the Integrity and Compliance Evaluation System for Companies Involved in Belt and Road Cooperation, Xi announced.
Eighth, China will strengthen the institutional building for international Belt and Road cooperation.
China will work with its BRI partner countries to strengthen the building of multilateral cooperation platforms covering energy, taxation, finance, green development, disaster reduction, anti-corruption, think tank, media, culture and other fields, Xi said.
Between 2016 and 2022 alone, China invested over USD 26 billion in Bangladesh emerging as the top FDI provider to Bangladesh. …reports Asian Lite News
China has been increasing its engagement with Bangladesh, especially in the past decade, as it tries to make a success of its flagship programme – the Belt and Road Initiative (BRI).
In its hegemonic and expansionist design in Asia and beyond, the BRI is a key tool, and countries like Bangladesh are a pawn in its game for Great Power status.
China signed a memorandum of Understanding (MoU) with Bangladesh in 2016 with the promise of helping Bangladesh transform into a developed nation by 2041 through measures like poverty alleviation, energy independence, and sustained economic growth.
With Bangladesh in need of aid and funds, and Western donors such as the USA, the UK, and France not pitching in due to their concerns regarding human rights violations, backsliding of democratic processes, corruption, and weak institutions, China found an opportunity in this vacuum to ensnare Bangladesh in its BRI, and effectively in its debttrap playbook that China has employed in other countries including Sri Lanka, Pakistan, and several African countries.
Today, there are over 240 Chinese companies dominating all the crucial sectors of Bangladesh’s economy including power, transport, digitisation, railroads, energy generation, and renewable energy.
Between 2016 and 2022 alone, China invested over USD 26 billion in Bangladesh emerging as the top FDI provider to Bangladesh. In 2023 alone thus far, China has already invested USD 800 million in Bangladesh in sectors including Plasma centre, garments, and manufacturing.
Concerns regarding China’s intentions have begun to emerge. In August 2022, Bangladeshi Finance Minister Mustafa Kamal cautioned the world to be wary of China’s debt trap through BRI investments. Bangladesh’s economy itself is inundated with Chinese investments.
For instance, China has built over 21 bridges and 11 highways, seven railway lines, and 27 energy and power generation projects. Chinese companies have also acquired three gas fields in Bangladesh responsible for generating over 50 per cent of Bangladesh’s total gas. Chinese stock exchanges (both Shanghai and Shenzhen) have acquired a 25 per cent stake in the Dhaka stock exchange.
China’s grasp on Bangladesh has tightened through its investments. Bangladesh needs to understand the Chinese playbook of debt-trap diplomacy. The cases of Sri Lanka, Pakistan, and several African countries signify the impending risk. The economic and financial condition of Sri Lanka is very precarious at the moment. The Sri Lankan economy is going through a high rate of inflation, a shortage of essential commodities including fuel and medicines, and a depleted foreign exchange reserve insufficient for import cover of even a few weeks.
The China factor in worsening Sri Lanka’s economic and financial condition cannot be overlooked. Between 2005 and 2015, China emerged as Sri Lanka’s leading source of FDI and development assistance.
China saw the opportunity in investing in multiple mega infrastructure projects in Sri Lanka in order to gain a strategic advantage in the Indian Ocean region and to counter India’s heft in the South Asia region. On the other hand, Sri Lanka readily sought Chinese assistance given the quick disbursement of loans as well as indifference to Sri Lanka’s human rights record and domestic issues.
Despite numerous warnings from experts about China’s salami-slicing strategy, which aims to ensnare nations in a debt trap while securing territorial rights, real-life cases illustrate its effectiveness. For instance, Sri Lanka found itself in a predicament where it had to lease its Hambantota port to China for 99 years. This was due to its inability to repay the substantial USD 1.4 billion debt owed to Beijing, which had financed the port’s construction. Deplorably, Sri Lanka not only accepted this arrangement but also encouraged China to invest in several projects that proved to be unsustainable.
China preyed on Sri Lanka’s economic vulnerabilities, loopholes, and corrupt practices for its political and economic calculations. When the debts became unserviceable on Sri Lanka’s part with its economic downfall, China shifted the blame to Sri Lanka for the depletion of its foreign exchange reserves and long-term economic mismanagement vis-a -vis unsustainable project proposals and borrowings.
Similarly, China is effectively colonising Pakistan through its debt-trap diplomacy.
The International Monetary Fund in its report in 2022 has raised a red flag with regard to China-Pakistan Economic Corridor (CPEC).
It stated that in 2022, contingent liabilities pose a significant risk to Pakistan’s debt sustainability with over 30 per cent of Pakistan’s total foreign debt being owed to China.
Pakistan’s latest Economic Survey 2021-22 gives a glimpse of how much indebted Pakistan is to China. China is Pakistan’s largest bilateral creditor with loans of over USD 14.5 billion. However, this does not cover the true extent of Chinese lending to Pakistan. For instance, lending has been made under various other categories such as China’s State Administration and Foreign Exchange (SAFE) which has lent over USD 7 billion to Pakistan.
Moreover, a significant part of Chinese lending is for CPEC which underlines the strategic intent behind lending. Such a project is central to China’s vision of building a Sino-centric world by creating infrastructural projects and pulling these countries into its political orbit. All of this works well for China’s ploy of salami-slicing Pakistani territory.
China’s BRI finds the best host in Africa with all the African countries barring a few being enmeshed in China’s flagship project.
Notably, in a number of African countries China is involved not only in large-scale infrastructure, industrial, and connectivity projects, but additionally in peace and security projects as well. It lures the African countries into its BRI ambit by presenting an attractive template that promises a high rate of return alongside no pre-conditions with the type of political regime or their nature of governance. It also does not care about elite capture or rent-seeking in these countries.
China’s focus remains on expanding the purview of its own influence in the emerging Great Game in the turbulent geopolitical global order.
China is well-known for its ‘flag-following-trade’ policy in Southeast Asia and the broader Indo-Pacific region. Its Belt and Road Initiative (BRI) holds significant sway in Bangladesh, raising concerns about debt-trap diplomacy and territorial encroachments.
China’s strategic investments in key sectors, similar to its approach in Sri Lanka and Pakistan, emphasize the need for vigilance.
The growing reliance on Chinese funding, evident in Bangladesh’s economic entanglement, requires a prudent understanding of China’s strategies.
Sri Lanka’s predicament serves as an example of how economic vulnerabilities can lead to long-term repercussions, and Pakistan’s involvement in the China-Pakistan Economic Corridor (CPEC) is another cautionary tale.
China’s expansionist behaviour, coupled with Africa’s integration into the BRI, underlines the urgency for nations to protect their sovereignty from China’s calculated manoeuvres within a rapidly shifting global order
Hence, Bangladesh must wisely avoid becoming a pawn in China’s grand geopolitical strategy to safeguard its sovereignty and interests.
Richardson expressed alarm over the spread of Chinese telecom infrastructure in South and Central America…reports Asian Lite News
US Southern Command (SOUTHCOM) General Laura Richardson said China is getting nearer to the United States by investing and expanding infrastructure in Latin American countries through its infamous Belt and Road Initiative, Voice of America (VOA) reported.
“They are on the 20-yard line to our homeland,” SOUTHCOM General Laura Richardson told the Washington-based Center for Strategic and International Studies, using an American football analogy to illustrate how close China is to scoring on the United States.
“Or we could say they’re on the first or second island chain to our homeland,” she added.
Like other US military leaders, Richardson stated that Beijing had not yet established a real military post in the Western Hemisphere. However, worries have grown, particularly in light of June reports indicating that China may be planning to expand further after upgrading an intelligence collection facility in Cuba in 2019.
“There’s not a Chinese base yet,” Richardson said.
“But I see with all of this critical infrastructure investment with these BRI [Belt and Road Initiative] projects that there could possibly be some [bases] someday,” she added.
There is a risk, according to SOUTHCOM’s Richardson, citing, in particular, China’s use of dual-use technologies to construct deep-water ports along vital waterways like the Panama Canal and the Strait of Magellan, which could allow Chinese officials to swiftly switch the facilities from civilian to military use, according to VOA.
Richardson also expressed alarm over the spread of Chinese telecom infrastructure in South and Central America, saying that five nations have already sourced their 5G mobile phone networks from China.
Another 24 nations, according to her, depend on China for their 3G or 4G mobile networks, and several of them are being given “almost zero cost” upgrades that would keep them dependent on Beijing for their communication requirements, according to VOA.
And so far, Richardson noted, the US has nothing better to offer.
“We are getting outcompeted by the Chinese right now,” she said. “We have to be able to have alternative methods, alternative companies, alternative options for them [the Latin American countries] to be able to select.”
According to VOA, China’s attempts to develop vital infrastructure across South and Central America are preparing its armed forces for a potential foothold on the US border.
China is in the “red zone” the commander of US Southern Command said on Friday, warning that many of China’s economic initiatives can easily be flipped to support a Chinese military presence.
This is not the first time SOUTHCOM’s Richardson has warned about China’s inroads into Central and South America.
During an appearance earlier this year at the Washington-based Atlantic Council, she spoke of “the tentacles of the PRC” reaching across the Western Hemisphere, noting 21 of 31 Latin American countries had signed on to Beijing’s Belt and Road Initiative, with 17 welcoming Chinese investment in their deep-water ports.
China’s embassy in Washington, however, dismissed such concerns as “lies and rumours… and slander.”
“To date, over three-quarters of countries around the world have joined this initiative, which has generated 420,000 jobs in these countries and helped more and more countries speed up economic growth,” Embassy spokesperson Liu Pengyu told VOA via email.
“The BRI is well-received among the world most importantly because it is an initiative of extensive consultation, joint contribution and shared benefits,” Liu added.
“China never imposes its will on other countries, nor does it slip any selfish geopolitical agenda into the initiative,” he added. (ANI)
Nepal and China had signed the BRI agreement some six years ago but it has failed to make any tangible progress.
Senior officials from Nepal and China reviewed the entire gamut of bilateral ties in Beijing but failed to mention that the Belt and Road Initiative (BRI) and Global Security Initiative (GSI) were also discussed.
In a statement issued by the Nepali side on Friday evening upon completion of the 15th meeting of the Bilateral Diplomatic Consultation Mechanism between the Foreign Ministries of Nepal and China, there was no mention of discussions about BRI and GSI.
Nepal and China had signed the BRI agreement some six years ago but it has failed to make any tangible progress.
Beijing recently came up with the new security architecture named GSI and is pushing Nepal to support it but Nepal has not responded yet.
Both sides took stock of the existing Nepal-China bilateral relations and cooperation and deliberated on the ways to further expanding and consolidating cooperation in various areas, including the exchange of bilateral visits; economic cooperation; promotion of trade, investment and tourism; building connectivity; and strengthening cooperation in the fields of agriculture, education, culture and people-to-people relations, among others, according to a statement issued by the Nepal Embassy in Beijing said.
The two sides discussed promoting people to people contacts and cultural cooperation, increasing the number of scholarships to Nepali students and professionals, capacity development of technical experts, among others.
Ambassador Chen Song meets Prakash Jwala, Minister for Physical Infrastructure and Transport.
The meeting also reviewed the progress of different infrastructure development projects under China’s grant assistance as well as Chinese-contracted projects and agreed to expedite the implementation of the projects so as to complete them in time.
With a view to reduce trade deficit, Nepal’s Foreign Secretary Bharat Raj Paudyal proposed for preferential treatment to Nepali primary products such as tea, coffee, herbal products, cooked buffalo meat, and other agricultural products.
The Chinese side agreed to encourage Chinese investors to make investments in mutually beneficial areas, according to the statement.
On the occasion, the two sides reviewed the cooperation between the two countries at the multilateral forums, including in the UN, and exchange of mutual support to each other’s candidatures.
They also discussed the importance of implementation of the UN Sustainable Development Goals and the usefulness of the GDI to promote the SDG agenda.
Vice Foreign Minister of China Sun Weidong led the delegation from the Chinese side.
During the meeting, Paudyal appreciated the government of China for enlisting Nepal as one of the outbound destination countries for group tourism.
The Vice Minister of China admired Nepal’s consistent adherence to one China policy and respect for the five principles of peaceful coexistence.
Paudyal appreciated the Chinese policy of non-interference and respect for Nepal’s sovereignty, territorial integrity and political independence, reads the statement by the Nepali side.
Dr. Anand Parappadi Krishnan, recently joined the Centre of Excellence for Himalayan Studies, School of Humanities and Social Sciences, Shiv Nadar University, Greater Noida, as a Fellow. Prior to joining Shiv Nadar Institute of eminence, Dr. Krishnan has served for 6 years as a full-time Researcher at the Institute of Chinese Studies, Delhi, and he continues his affiliation there as a visiting Associate Fellow. Recently, he was a Visiting Faculty at the National Law School of India University – Bengaluru.
Previously, he has held Fellowships at the India China Institute – The New School, New York City (under their China India Scholar Leaders Initiative) and at the Harvard-Yenching Institute, Cambridge, Massachusetts. Dr. Krishnan holds a Ph.D. degree in Chinese Studies from Centre for East Asian Studies, Jawaharlal Nehru University, New Delhi. His research interests include Labour and Supply chains in the Global South, Political economy of China and India, State-society relations, and Labour-Urban interface.
Asian Lite’s Abhish K. Bose meets Dr Krishnan to discuss the Belt and Road initiative of China. Excerpts from the interview.
ABHISH K BOSE: The belt and road project is aimed at improving the position of China in the global economic system and to boost the scope for its emerging hegemony. In many cases a country will be unable to change its economy in a particular direction without altering the way the world economy is organised. Is the belt and road project guided by that intent? What does it tell us of the Chinese strategic thinking and policy framework?
Dr ANAND: While there has been much written, speculated and anticipated, the BRI to put it in simple terms, was conceived by the Chinese party-state to export its overcapacities in economic production and therefore, look for new markets. In fulfilling this endeavour, if the initiative helps in altering how the world economy is organized, so be it. However, it does not seem that the BRI presents a credible and viable alternative by the Chinese which is very different from the existing world order and how the world economy is organized. I believe the BRI represents what geographer David Harvey calls ‘spatial fix’.
Xi Jinping delivers a speech at a ceremony marking the 100th anniversary of the founding of the CPC in Beijing. (Xinhua/Ju Peng/IANS)
ABHISH K. BOSE: The belt and road is mainly about economic cooperation, comprising building, factories, roads, bridges, ports, airports and other infrastructure as well as electric power grids, telecommunications networks, oil and natural resources pipelines and related projects. How will this project once executed can change the face of the regions where the project passes through? Is there any hidden Chinese agenda behind this project?
Dr ANAND: Lack of infrastructural development is a pertinent issue in the global south, and many of the countries do not have the requisite resources to fulfill that. The experiences of countries in Africa, Southeast Asia and South America to the efforts by the West have not been really satisfactory. Plus, the legacy of colonialism weighs largely in areas such as Africa. It is here that the Chinese with deep pockets and more resourceful fill the gap. Plus, the Chinese are palatable for governments of all persuasions and do not necessarily interfere with domestic politics in these countries. However, while this is largely the narrative put forth by China, over the years there are also issues that have cropped up like debt related concerns/anxieties, cultural tensions, and over the last couple of years, COVID-19 related delays. In committing and investing in the infrastructural development of these regions, the Chinese champion the ‘win-win’ discourse, and seek to showcase their economic development externally. Rather than any ‘hidden agenda’, the BRI seeks to provide more diplomatic muscle and great power status to China vis-a-vis the US-led West.
Aerial photo shows a view of the Lower Sesan II hydroelectric power station at Sesan District of Stung Treng Province, Cambodia. The Lower Sesan II hydroelectric power station, born of cooperation between Cambodia and China under the framework of the Belt and Road Initiative, was inaugurated in December 2018. (Photo by Chen Gang/Xinhua/IANS)
ABHISH K. BOSE: According to available estimates, this massive project comprises of the investment of 4 -8 trillion dollars. The terms of Chinese credit to countries party to the project vary widely, from interest free loans and even grants in the case of some projects in Pakistan up to commercial rate in the case of the Ethiopia – Djibouti railway. Revealingly, Djibouti’s public external debt has increased from 50 to 85 per cent of its GDP since 2015, the highest for any low income country. China has provided nearly 1.4 billion of funding for Djibouti’s major investment projects. The Chinese company operating the port of Gwadar in Pakistan reportedly receives 91 per cent of the ports profits. Is the project an expression of Chinese economic imperialism and to what extent is it likely to burden the stakeholders?
Dr ANAND: Concerns of debt burden are logical corollary of the infrastructural projects undertaken by Chinese companies in the BRI. There is no finality on this aspect, as there is also new scholarship which problematizes – and critiques – the narrative of debt-trap. Scholars like Deborah Brautigam have in fact summarily rejected the discourse on debt trap. However, while the real extent of debt burden may be debatable, it is a reality that some of these projects do take the shape of white elephants. The best example of that would be the Hambantota port in Sri Lanka. I would be careful not to use terms like imperialism loosely, since these are very loaded and have to be properly contexualized/ historisized.
ABHISH K. BOSE: Ports such as Gwadar and Kyaukpyu are intended to connect the Indian Ocean with China over land transport corridors. Pakistan and Myanmar may become China’s California, granting it access to a second Ocean and resolving the Malacca dilemma. Access to the offshore gas fields in the Bay of Bengal was always central to the Kyaukpyu project. These points to the strategic aims of China through the project. How, and to what extent, will these projects benefit China in the long run? How will it bear on its trade with India?
Dr ANAND: With China, a lot of things also fall under the ambit of dual use/dual purpose. So, it is quite logical or even rational to look at these ports as fulfilling strategic aims/objectives. These ports also help China to offset some of the chokepoints in the Malacca straits, along with providing some access to fulfilling China’s energy needs in the longer term. Further, it helps provide China additional maneuvering space in the south Asian region.
Soldiers attend the flag-raising ceremony in rain in Beijing, capital of China on National Day. (Xinhua/Zhang Yu) (mp)
However, these ports need not necessarily be seen in binary terms vis-a-vis India, even though India’s role in the region has to move out of its conventional ‘big brother’ attitude, or patronizing behaviour. India also needs to heighten its own infrastructural and diplomatic measures in the region for sustenance of its relationship with these countries and not necessarily to only ward off the China challenge.
ABHISH K. BOSE: Bypassing the Malacca strait by building a canal through the Kra Isthmus in Thailand – around 100 km long and 25 meters deep, would take ten years could be an even greater game changer. From a shipping perspective it would mean shorter and cheaper- and speedier by two or three days – route for all. But a number of countries including the US may resist the idea because it could mean the speedier deployment of the Chinese Navy to the Indian Ocean. Should this be a worry for the US or European powers?
Dr ANAND: It would not be wise to comment on something that is in the realm of speculation. Plus, this project would take some more time before it actually gets some proper shape. Hence, any possible opposition from US and others would also need to wait rather than do so now at the formative stage. Ultimately, it will depend on how effectively China is able to negotiate with the Thais in working on this project, especially given the delays on account of the pandemic and China only returning to normalcy now.
ABHISH K. BOSE: It is said that China hopes to build a ‘ Polar silk road’ along the Arctic shipping lanes, the third main sea route of the belt and road. Shipping through the northern sea route would shave almost twenty days off the regular passage time using the traditional route through the Suez canal. Among China’s main interests in the region is its major stake in Russia’s Yamal liquefied natural gas project which is expected to supply China with four million tons of LNG. How will this benefit China?
Dr ANAND: Again, a lot of these projects are more on paper and on the realm of ideas rather than being in actual flesh and blood. Post the propelling of BRI, there has been a lot of romanticizing/fantasizing about the various possibilities of China’s shipping lanes. The Polar Silk Route is in my view, a very premature project and there has not been much weight or financial resources dedicated in this regard.
China rail project aims to link Tibet to Kathmandu, may be extended to Indian border.
While undertaking analysis of the BRI, it is also important to not be overemphatic, and be aware of speculation-ridden narratives. Further, Arctic routes and building projects around those are also highly cost ridden and it remains to be seen how the Chinese economy now emerging out of Zero Covid policies, will be able to readily take up such projects.
ABHISH K. BOSE: The roads as part of the belt and road project passes through the China -. Indian Ocean – Africa – Mediterranean sea blue economic package linking the China – Indo China peninsula economic corridor, running westward from the south China sea to the Indian Ocean and connecting the China – Pakistan economic corridor and the Bangladesh – China- India – Myanmar economic corridor. Another road is the blue economic passage of China – Oceania – South Pacific, traveling south ward from the South China sea into the Pacific Ocean. Another passage is also envisioned leading up to Europe via the Arctic Ocean. What are the strategic importance of these roads?
Dr ANAND: Again, there is also a lot of fantasizing/romanticizing that is inadvertently associated with BRI. Hence, many of these roads are still on the realm of ideation, rather than actual presence. CPEC (China Pakistan Economic Corridor) is a credible example, while BCIM (Bangladesh China India Myanmar) economic corridor is yet to be termed a credible project given how India is still not a participant in BRI and in fact, is correctly reluctant in fitting this into BRI. Hence, despite many efforts by China, it is not accurate to bracket BCIM within BRI. China’s aim, through the roads, is to find new markets for its goods and distribute its overcapacity. Thus, rather than spreading wide and covering all areas, I believe the party-state would be more prudent and realistic in choosing those areas – especially post pandemic – which are not only commercially viable but also cost effective and have better returns to investment.
Prime Minister Narendra Modi and Chinese President Xi Jinping inside a house boat, in Wuhan. (Photo IANS_PIB)
ABHISH K. BOSE: Another central driver of the Road concerns the growing trade connections between China and India. In turn this will have to be based on huge infrastructure projects along the Indian Ocean coast or by train through Myanmar and Bangladesh. It was not surprising therefore to find that the port of Kolkata featured prominently in the original plans for the Road with the Indian city appearing on the famous map of the initiative published by Xinhua. The port could be an important conduit in developing value chains connecting Chinese and Indian manufacturers, but more recently it has been dropped from all the official references, as India increasingly distanced itself from the belt and road project. To what extent, if any, can the project boost the trade between India and China?
Dr ANAND: I do not think that India will, at least in the foreseeable future, be ready to be part of BRI in any manner. While its trade relations with the People’s Republic of China will continue in the conventional bilateral manner, it would be reticent (and correctly so, in my opinion) to join this Initiative. There has been no development in the last few years for India to change its course and adopt a different stance on BRI, especially given the developments on the boundary and attempts by Chinese to change the status quo. Further, India is ridden with weak infrastructural capacity – I have written about this here in the beginning of the year 2020. Any hope for BRI through/including India is at best, wishful thinking than anything else.
China’s image as a dependable economic partner has taken a beating as Beijing refused to provide any financial assistance to cash strapped Sri Lanka, reports Mahua Venkatesh
China’s much-hyped Belt and Road Initiative (BRI) in Nepal has been a non-starter. The two countries signed a memorandum of understanding in May 2017 to expand bilateral cooperation under the BRI but five years later, there is nothing to show on the ground, despite Chinese President Xi Jinping’s visit to the Himalayan nation in 2019.
Earlier this month, two contracts of two Chinese companies that have been working on the Kathmandu-Terai Fast Track were temporarily suspended for delayed execution. The contracts were signed by the Nepali Army with China State Construction Engineering Corp. Ltd and Poly Changda Engineering Co. Ltd on May 14, 2021, for building three tunnels, bridges, and a partial road, the Annapurna Express said in a report.
Issues related to interest rates and repayment structure of the loans have remained a source of contention. Nepal wants the terms of the loans for the infrastructure projects to be on par with other multilateral agencies’ funding mechanisms.
Deutsche Welle (DW) in a report also said that Nepal “believes the BRI projects should be open for competitive bidding”.
Besides, China’s image as a dependable economic partner has taken a beating as Beijing refused to provide any financial assistance to cash strapped Sri Lanka. “China, which had positioned itself as a saviour for other countries with its BRI projects and funding is in a spot after it refused help to Sri Lanka,” an analyst who has lived in China told India Narrative.
Foreign policy watchers said that the BRI is unlikely to gain steam in the coming years especially now as the Sher Bahadur Deuba administration approved the $500 million financial assistance from the US based foreign assistance body, Millennium Challenge Corporation (MCC).
Chinese Foreign Minister Wang Yi meets Nepal Prime Minister Sher Bahadur Deuba. (photo:@MofaNepal/Twitter)
The grant is expected to help in developing an electricity grid of 400kVA transmission lines in Nepal.
According to an Observer Research Foundation study, the development of the grid will not only boost distribution of power in the domestic market but also help in exporting it to India. Additionally, the implementation of the MCC could boost the Nepalese economy in terms of raising employment opportunities as well as raising the per capita income, the study said.
Not just that. Nepal’s foreign ministry, which issued a statement after Chinese foreign minister Wang Yi’s visit to Kathmandu in March, did not mention anything on BRI projects. However, Beijing in its statement highlighted the importance of the BRI framework in Nepal.
“The recent developments of growing US influence in Nepal is an area of concern for China. Where Nepal stands today, her economic growth necessitates her Neutrality and the need to grow with the basket of multiple choices. Therefore, China may not succeed with much political influence but will seek a share in economic investments into the country, Navita Srikanth, foreign policy expert told India Narrative.
Nepal’s India approach
Meanwhile, India and Nepal, which have an open border policy, renewed focus on boosting political and economic cooperation. Prime Minister Narendra Modi’s visit to Lumbini on the occasion of Buddha Purnima was a “sentiment booster”.
Prior to Modi’s visit, his Nepalese counterpart Sher Bahadur Deuba too paid a visit to India in April.
“For post-pandemic economic rebounding in both countries, a positive environment that is created with the Prime Minister’s visits from both sides in recent times will be utmost crucial,” Ram Prasad Subedi, Deputy Chief of Mission, Embassy of Nepal in India said at an event organised by the India Nepal Centre under the PHDCCI framework. He added that Nepal has already begun exporting 177 MW of energy to India via the power exchange market.
(The content is being carried under an arrangement with indianarrative.com)
In the initial stage, the projects are touted to be highly beneficial for the local population and the participating country but at the end, the projects have not yielded results…reports Asian Lite News.
China’s Belt and Road Initiative (BRI) project has become synonymous with wasteful spending, ecological destruction and massive debt burdens and aims to make profits for the participating country’s leaders and Chinese companies at the cost of the nation’s natural resources or people, a media report said.
In 2018, a study found that 270 out of 1,814 BRI-related projects had problems related to debt sustainability, labour and environmental standards, national security, transparency, and corruption. A McKinsey survey in 2017 revealed that 60 per cent to 80 per cent of the Chinese companies in Africa admitted to paying bribes for bagging contracts. Further, Chinese firms scored second to last in one of the latest Transparency International Bribe Payers Index in the Continent, said the InsideOver in a report.
In the BRI projects, multiple cases of corruption have emerged in an identical pattern, opaque agreements signed between China and the BRI participating country with a closed bidding process, only to grant the project to the Chinese companies secretly. In general, the cost quoted is very high when compared to the prevailing cost in the market. In many of these cases, usually, senior leaders of the participating BRI country are involved in allocating projects to the Chinese companies through this managed bidding process. In the initial stage, the projects are touted to be highly beneficial for the local population and the participating country but at the end, the projects have not yielded results.
With these projects, the Chinese companies and their officials have exported corruption to the BRI country by bribing local authorities or the government in securing mineral resources, including rare-earth minerals of African countries. This reflects that these projects have been designed for making profits for the country’s leaders and the Chinese companies at the cost of their natural resources or the people. In many cases the countries due to heavy corruption in the projects have failed to repay the loan to China and have fallen into ‘Debt Trap’, said the InsideOver.
China has been making such practises under the umbrella of BRI, the African continent has been a case in point and has faced the brunt of the malpractices followed while implementing the BRI. One of the most glaring examples of China’s mismanagement is the East African project, the Nairobi-Mombasa Railway, running between Mombasa and Nairobi. The project, popularly known as the SGR or the Standard Gauge Railway, suffered from significant governance failures and corruption. Kenyan authorities also arrested (2018) seven officials from China’s Road and Bridge Corporation in connection with bribery attempts meant to derail ongoing investigations into SGR corruption, according to the InsideOver.
In 2018, concrete evidence of corruption came out when the Kenyan government arrested several senior officials on corruption and fraud charges, including both the Chairman of Kenya’s National Lands Commission and the Managing Director of Kenya Railways Corporation. These officials allegedly conspired on a USD 2 million fraudulent land-acquisition scheme, whereby they illegally acquired government-owned land and then sold it out under the compensation process meant to repay those whose lands were in the new railway’s path, said the InsideOver.
In Africa, many nations participating in the BRI widely face public governance gaps and a disjuncture between the incentives of the governing elite and those of society at large.
In the BRI participating countries, transparency and accountability need to be restored.
Under the BRI projects, billions of dollars are being pumped into corrupt regimes where graft issues are embedded in the political systems, making corruption scandals inevitable. (ANI)
