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China’s BRI Loses Ground In Africa As India, US Step In

Chinese President Xi Jinping delivers a keynote speech at the opening ceremony of the Eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) via video link in Beijing, capital of China, Nov. 29, 2021. (Xinhua/Huang Jingwen/IANS)

There are two reasons for this decline in Chinese presence in Africa since the past few years: internal turmoil and problems facing China and the reluctance of the African nations to accept loans from China because of the difficulties associated with BRI projects, writes Vaishali Basu Sharma

The Belt and Road Initiative (BRI) of China has reached a dead end in Africa.  Burdened with debt and experiencing corruption scandals, violations of labour laws, environmental hazards and public protests associated with BRI projects, the African nations are increasingly turning them down and now turning to the United States of Africa to fill the need for building infrastructure projects in the continent. India has also been taking a leading role in investing in infrastructure projects in African countries.

A Boston University study in 2023 found that lending to Africa by China has dropped to the lowest level in two decades, says Voice of America. Available data say in sub-Saharan Africa BRI investments fell by 55 percent between 2021 and 2023, from $16.5 billion in 2021 to $7.5 billion in 2023. This region drew $4.5 billion of investment in construction activities in 2022, compared to $8.1 billion in 2021. An Observer Research Foundation study says BRI investments in Africa reached their peak in 2016. After that, Chinese loan volumes have steadily declined in Africa. Between the pre-pandemic years of 2017 to 2019 and the pandemic years of 2020-22 the average volume of loan to African countries fell by 37 per cent. The situation has not been retrieved in the post-pandemic years.

According to these studies, there are two reasons for this decline in Chinese presence in Africa since the past few years: internal turmoil and problems facing China and the reluctance of the African nations to accept loans from China because of the difficulties associated with BRI projects.

China has been facing domestic challenges increasingly in recent years. The revenue of local governments has always played a key role in the economic growth of China. Since the pandemic of 2020-21, the falling values of property and land and increased government spending have caused revenue shortages for local governments. The revenue deficit of provinces crossed the $1000 billion mark in 2022.  In 2023, China’s national budget revenue was $3.3 trillion, while the national expenditure grew to $4 trillion, resulting in a deficit of $690 billion. Besides, rising youth unemployment, an ageing population and geopolitical unrest like the war in Ukraine have all contributed to the decision of China to reduce their large-scale debts. As a result, some African countries are stuck with lots of proposals for mega projects but China is not funding them any longer.

In most cases, however, the African countries themselves are turning down fresh proposals for investment under BRI or are withdrawing from ongoing BRI projects. Many BRI projects have faced problems in the stage of implementation and a growing number of borrowers had to struggle to repay their debts to China. Some African governments have been accused of undertaking monstrous white elephant BRI projects; among them Standard Gauge Railway in Kenya and Kampala- Entebbe Expressway in Uganda. The projects are now faced with insurmountable problems of debt repayment and the uncertain global environment putting a question mark on their economic viability. Projects have been executed with little concern for issues related to economic feasibility and social and environmental risks.

Botswana has withdrawn from a 300 km road rehabilitation project because financial negotiations have taken longer than usual because of discrepancies in terms and conditions. Kenya and Uganda have pulled out of negotiations from the Naivasha to Kampala Standard Gauge Railway project for the same reason. “I wish those responsible for the SGR would have looked at repayment. It’s a massive investment project, to have repayment being done in 20 to 30 years,” Kenyan economist Victor Kimosop has been quoted in the VOA report in the contest of the Mombasa to Nairobi and Nairobi to Naivasha railway project.

In the latest setback for BRI in Africa, an oil pipeline being built with Chinese assistance at Niger has been threatened by an internal security crisis. A $400 million deal was signed in April this year with PetroChina for laying the 1,930-km-long pipeline from the Chinese-built Agadem oil field in Niger to the port of Cotonou in Benin. In June, there was an attack on the pipeline by rebel group Patriotic Liberation Front that disabled a part of the pipeline. The group has threatened more attacks if the deal with China is not cancelled.

Among the reasons for unsuccessful negotiations and abandoned projects are disagreements over terms, the risk that African countries will not pay their share of project costs, concern over African debt levels and the problems in executing thermal power projects because of global warming.  The Covid-19 pandemic has complicated the situation with respect to repayment of Chinese debt by African countries. Nearly 40 percent of the African countries are now estimated to be at high risk of debt distress. In 2021, 30 of the 48 countries that were part of the G20 Debt Service Suspension Initiative were from Africa. This initiative allows less developed countries to suspend the payment of the principal and the interest on their debts to G20 member countries. China had to write off 23 loans from 17 African countries and provide debt refinancing and deferring of payment to several other African nations. Kenya has already approached the U.S. for financial assistance.

U.S. President Joe Biden has appealed to the African nations that the U.S. can be a better partner in the economic revival of these nations than China. Loans from Beijing carry high interest rates and other difficult terms. China is reluctant to write off foreign debt and is secretive about how much money it has loaned. The U.S. has called on international financial institutions to coordinate debt relief and support through multilateral funding agencies offering better terms.

India is also coming up in a big way to replace China as the main country helping to bridge the infrastructure gap in Africa. The Adani Ports and Special Economic Zone has made an entry in Tanzania with the signing of a 30-year agreement with Tanzania Port Authority to operate and manage a terminal at the Dar es Salaam Port in the east African country. “We are confident that with our expertise and network in ports and logistics, we will be able to enhance trade volumes and economic cooperation between our ports and East Africa. We will strive to transform Dar es Salaam Port into a world class port,” APSEZ Managing Director Karan Adani has said.

Senior executive of India’s Shapoorji Pallonji Group S. Kuppuswami has recently said in Washington that infrastructure projects set up by Indian companies in Africa are helping strengthen ties with African countries and called upon American development finance institutions to collaborate with India to ensure early execution of such projects to regain the trust of nations lost out to China. These projects by India have “phenomenally” strengthened India’s ties with African nations, he has told PTI in an interview.

(The author is an analyst on geopolitical and macroeconomic issues. Email: postvaishali@gmail.com)

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Why Did China’s BRI Falter in Nepal?

Highlighting Nepal’s complex diplomatic ties with the two major powers, China and India, Lord Bruce talked about the difficulties Kathmandu faces in pursuing its foreign policy….reports Asian Lite News

The Democracy Forum (TDF) conducted a webinar titled ‘Why has China’s Belt and Road Initiative (BRI) failed to take off in Nepal.’ During this session, panelists shared their insights and perspectives on the factors contributing to the project’s lack of progress.

All issues encompassing funding and transparency concerns and the nation’s complicated geopolitical position were discussed in the webinar.

The panel included Lord Bruce, Humphrey Hawkesly, Barry Gardiner, Andrew G Ross, Samir Sharma, Kamal Dev Bhattrai, and Prashanti Poudyal.

In June, Nepal’s foreign minister confirmed that not a single project in the country had been carried out under the initiative after China claimed that the Pokhara International Airport would be the BRI’s flagship project.

In the discussion led by Humphrey Hawkesly, TDF President Lord Bruce spoke about the complexities surrounding the Chinese project while providing a recap of recent events.

“In 2017, Nepal signed up for China’s Belt and Road Initiative. However, nothing has been accomplished after six years. No Memorandum of Understanding within the BRI framework was signed by the Prime Minister of Nepal during his eight-day visit to China in September,” said Lord Bruce.

Highlighting Nepal’s complex diplomatic ties with the two major powers, China and India, Lord Bruce talked about the difficulties Kathmandu faces in pursuing its foreign policy.

Highlighting Nepal’s complex diplomatic ties with the two major powers, China and India, Lord Bruce talked about the difficulties Kathmandu faces in pursuing its foreign policy.

In this context, the TDF president mentioned the Millennium Challenge Corporation Nepal Compact, a grant of USD 500 million from the United States for infrastructure projects.

“The MCC posed concerns regarding Nepal’s alignment in the global geopolitical landscape, entangled between the objectives of the United States, China, and India,” said Bruce.

Andrew Ross, a senior lecturer at the University of Dundee, first talked about the Chinese initiative in the broader geopolitical power game and said that the reconstruction of the ancient Silk Route seeks to strengthen Beijing’s economic leadership.

Ross said that the visually appealing projects are making the countries wary. “It is being viewed with considerable anxiety in relation to non-performing assets and the implications of non-meeting debt obligations,” he added.

Prashanti Poudyal, a Research Fellow, cited Nepal’s inability to afford high-interest loans for significant infrastructure projects as a reason behind a cautious and strategic approach by Nepali leaders.

“The BRI loans are much higher than the loans provided by other multilateral organisations. The average interest rate of the BRI projects is 4.2 per cent with a grace period of less than two years and a maturity length of less than ten years,” said Poudyal.

She also added that the experiences of regional neighbours like Sri Lanka and Pakistan acted as a cautionary tale for Nepal.

In the webinar, the complexity of Nepal’s geopolitical situation was also emphasised. Nepal’s reluctance to fully embrace the BRI was linked to concerns about its constitutional obligation of non-alignment.

In the discussion, it was also pointed out that Nepal sees BRI as a discrete project rather than an all-encompassing endeavour, which stops Kathmandu from fully embracing it.

Political instability, a non-friendly atmosphere for investment, and the fear that Chinese interference might lead to financial disaster are some of the reasons behind the non-implementation of Chinese projects in Nepal, the participants noted. (ANI)

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Philippines Scraps China’s BRI Projects

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)

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India reiterates opposition to China’s BRI project  

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)

During the SCO summit in July hosted by New Delhi, India did not endorse the BRI while other members supported the project…reports Asian Lite News

India on Thursday once again refused to endorse China’s ambitious Belt and Road Initiative, becoming the only country in the Shanghai Cooperation Organisation not to support the multi-billion-dollar infrastructure project.

A Joint communique at the end of the 22nd meeting of the Heads of Government Council of the SCO here said that Iran, Kazakhstan, Kyrgyz Republic, Pakistan, Russia, Tajikistan and Uzbekistan reaffirmed their support for China’s Belt and Road Initiative (BRI) – the pet project of Chinese President Xi Jinping.

It said that they noted ongoing work to jointly implement this project, including efforts to align the development of the Eurasian Economic Union and the Belt and Road Initiative.

During the SCO summit in July hosted by New Delhi, India did not endorse the BRI while other members supported the project.

India has protested to China over the USD 60 billion China-Pakistan Economic Corridor – the flagship project of the BRI – as it is being laid through the Pakistan-occupied Kashmir (PoK).

External Affairs Minister S Jaishankar, who attended the summit in Bishkek, said that SCO members should work together to promote stability and prosperity in the region by strictly adhering to the principles of international law, respecting the sovereignty and territorial integrity of each other and encouraging economic cooperation.

In his address, Jaishankar also said that the India-Middle East-Europe Economic Corridor and the International North-South Transport Corridor could become “prosperity enablers.”

The India-Middle East-Europe Economic Corridor, which many see as an alternative to China’s BRI, was jointly announced by the leaders of the US, India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union on the sidelines of the G20 summit in September.

The International North-South Transport Corridor is a 7,200-km long multi-mode network of ship, rail, and road routes for moving freight between India, Iran, Azerbaijan, Russia, Central Asia and Europe.

The BRI has raised global concerns over China’s debt diplomacy of extending huge loans to smaller countries for unsustainable infrastructure projects.

The Hambantota port, which was funded by a Chinese loan, was leased to Beijing in a 99-year debt-for-equity swap in 2017 after Sri Lanka failed to pay off the debt.

China is doling out huge sums of money for infrastructure projects in countries from Asia to Africa and Europe. The US’ previous Donald Trump administration had been extremely critical of the BRI and was of the view that China’s “predatory financing” is leaving smaller countries under huge debt endangering their sovereignty.

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Belt and Road Forum Loses Shine

Out of the 130 global leaders touted by China, only 22 Presidents and Prime Ministers of different countries participated in the Forum, writes Ashok Sajjanhar

In the run-up to the Third Belt and Road Forum (BRF) which took place in Beijing on 17-18 October, 2023, the Chinese Foreign Ministry was always cagey to share the names of world leaders who would be participating in the Forum. It would only say that more than 130 global leaders including heads of international organizations would be attending. After the conclusion of the BRF, it is no longer a mystery why Beijing was reticent in sharing this information.

Out of the 130 global leaders touted by China, only 22 Presidents and Prime Ministers of different countries participated in the Forum. While as an absolute number it might not appear insignificant, it pales in comparison with the participation of global leaders in the first two Forums organized by China: 30 in the First Forum in 2017, and 37 in the Second Forum in 2019. The third Forum was in some ways even more important than the first two as this was to mark the tenth anniversary of the launch by Chinese President Xi Jinping in 2013 in Kazakhstan and Indonesia. Moreover, this is seen as a flagship project of Xi in which he has invested considerable personal clout and political capital.

A detailed comparison of the participation in the 3 Forums brings out some interesting features. The most significant is the comparatively small numbers of European leaders who participated in the current Meeting. The 2017 Forum witnessed the attendance of 10 heads of state or government from European countries which represented one third of the total participation. This number grew to 11 in the 2019 BRF. This year only 3 European leaders showed up: Hungarian Prime Minister Viktor Orban, Russian President Vladimir Putin, and Serbian President Aleksandar Vucic! In the first two Forums, leaders of Belarus, Czech Republic, Greece, Italy, and Switzerland all participated at the highest level. All of them failed to appear this year.

Chinese Premier Li Qiang meets with Kyrgyz President Sadyr Japarov in Bishkek, Kyrgyzstan. (Xinhua_Wang Ye)

This appears to be strongly indicative of how China’s influence has waned in Europe, possibly on account of its political, and likely material support of Russia’s aggression against Ukraine since February last year. It is also noteworthy that Putin was heralded, both by China and Russia, as the most significant presence at the Forum, probably because of Russia’s need to demonstrate that it is not isolated as a result of its Ukrainian misadventure. It is likely that by focusing exclusively on Putin’s presence at the Forum, China could have driven away some other European leaders who might have been contemplating to attend. It is significant that the EU High Rep of Foreign Policy Josep Borrell did visit China from October 12 to 14 but made it a point to not overlap his tour with the BRF.

It appears obvious that while the interest of Europe in the BRI projects has declined sharply, China has not been able to attract more leaders from the developing world to replace the shortfall from Europe. It seems clear that China is using its investments through the BRI projects, not only as a geo-economic tool but equally, if not more importantly, to buy geo-strategic influence in developing countries of the Global South. It is using its deep pockets and availability of easy finance with no uncomfortable questions asked, to challenge India’s aspirations to emerge as a Voice of the Global South.

Another striking aspect of the presence of global leaders is the sub-par participation from Southeast Asia. All 11 countries of the region – ten members of the Association of South-East Asian Nations (ASEAN) and East Timor (which is likely to become a member of the ASEAN in 2025) have signed on to BRI projects. Out of the eleven countries, seven leaders attended the first BRF; nine out of the 10 ASEAN attended the second BRF (and the 10th, Indonesia, sent its vice president). But this year, just half the ASEAN members sent heads of state or government: Cambodia, Indonesia, Laos, Thailand, and Vietnam.

Of the Southeast Asian states who didn’t send top leaders this year, Malaysia, Myanmar, and the Philippines had attended the previous two Forums. The reason for Myanmar’s absence is obvious: civil war plus a toxic reputation for the junta. The Philippines’ non-attendance seems to be obviously due to renewed tensions with China over the South China Sea; Malaysia’s non-attendance is confusing but could also be attributed to disputes in the South China Sea, particularly in the wake of issuance of a standard map by China recently in which it has shown the whole of South China Sea as a Chinese water-body territory.

What is also curious is that out of the 54 states of Africa, only five attended the BRF: Egypt’s Prime Minister, Ethiopia’s Prime Minister, Kenya’s President, Mozambique’s Prime Minister, and Republic of Congo’s President. That is the same number that attended the Forum from Africa in 2019 although both Egypt and Mozambique were represented last time by their more powerful Presidents as against Prime Ministers this time. There is a huge gap between the number of countries from Africa that have signed on to BRI projects – more than 50 of them – and those who respond positively to participate in the BRFs.

A similar inexplicable gap exists for the Middle East, where all countries except for Israel and Jordan have signed on to the BRI. Yet only the UAE has ever sent a top leader to a Belt and Road Forum (once, in 2019). The UAE downgraded its representation this year amid the turmoil in Israel to its Supreme Council member Saud Bin Saqr Al Qasimi.

And no country from Central America and the Caribbean region has ever sent a head of state or government to a Belt and Road Forum, even though 13 states from the region are part of the initiative. From South America, only Argentina and Chile participated at the level of Presidents.

From Central Asia, two presidents – of Kazakhstan and Uzbekistan – attended as against four Presidents last time. Presidents of Tajikistan and Kyrgyzstan were missing from the line up this year. The surprising addition was of Turkmenistan which was absent last time but was represented this time by the former President Gurbanguly Berdimuhammedov, Chairman of Turkmenistan People’s Council.

The absence of such a large number of leaders from Africa, Middle East, Central America etc. in the BRF could be due to a number of reasons. Firstly, signing up to the BRI projects doesn’t really count for much in the foreign policy calculations of several countries, particularly those belonging to these regions, most of which are located quite far from China. Secondly, China’s primary focus in pushing the BRI projects appears to be in its vicinity viz. Central Asia, South East Asia etc. and in some strategic partners in Africa, South America etc. Thirdly, many of the countries might not be seeing the Belt and Road Forum as a significant event unless they have some specific reason to make the effort to attend. Amid concurrent global crises in Ukraine and Israel and pressing economic issues for many countries at home, most BRI leaders appear to have chosen to convey their regret and stay at home.

Conclusion

The third Belt and Road Forum for International Cooperation drew to a close on 18th October without the “Leader’s Roundtable” and joint communique that rounded off previous Forums held in 2017 and 2019. The omission could be owing to other world leaders’ reluctance to issue a joint statement with Russian President Vladimir Putin, who is wanted by the International Criminal Court (ICC) for war crimes in Ukraine.

Putin was the guest of honor at the forum, seated front and center during Xí Jìnpíng’s opening remarks and given more than 10 minutes to speak following Xi.

Chinese media claimed that “representatives” from over 140 countries attended, but that tally included everyone from ministers to journalists. Beijing may have been able to pack the room with a record number of attendees, but the BRI family photo, consisting of top-level dignitaries, looked somewhat forlorn this year.

However, the poor showing should not reflect adversely on the BRI’s influence and popularity. The Israel-Hamas war probably impacted high-level attendance from the Gulf (although the Gulf has not deputed high level leaders to participate in the earlier BRFs in 2017 and 2019), and after attending the Asian Games in September, it may have been too soon for some leaders to make a return trip to China. In any case, the low attendance and some significant hiccups in implementation of BRI projects over the last ten years like the charges of debt trap, lack of economic viability and environmental sustainability, absence of new jobs or technology in host countries, corruption etc. have left a host of issues for the Chinese leadership to reflect upon.

(Ashok Sajjanhar is a former Ambassador of India to Kazakhstan, Sweden and Latvia. He is an Executive Council Member at the Manohar Parrikar Institute for Defence Studies and Analysis and President, Institute of Global Studies. Views expressed are personal and exclusive to India Narrative)

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Sri Lankan President Arrives in Beijing For BRI Forum

Sri Lanka’s total external debt exceeds USD 50 billion, with a significant portion, roughly ten per cent, owed to China…reports Asian Lite News

Sri Lankan President Ranil Wickremesinghe on Monday arrived in Beijing to attend the third Belt and Road Forum for International Cooperation, China’s official state news agency Xinhua reported.

Meanwhile, the Daily Mirror, Sri Lanka, recently reported that a multifaceted interplay of economic troubles, strategic dynamics, and regional influence is currently unfolding in Sri Lanka. This island nation grapples with mounting debt and is navigating China’s growing presence and influence in the region.

Sri Lanka’s total external debt exceeds USD 50 billion, with a significant portion, roughly ten per cent, owed to China. This debt encompasses official loans and less visible commercial borrowings from Chinese commercial banks.

Notably, Sri Lanka owes USD 119 million to the China Development Bank Corporation, USD 232 million to the China Development Bank, and USD 232 million to the Export-Import Bank of China, according to Daily Mirror, a daily English-language newspaper published in Sri Lanka.

Despite China’s promises to assist in debt restructuring, tangible actions have been limited. Sri Lanka urgently requires a USD 3 billion bailout package from the International Monetary Fund (IMF), with the first instalment already received. The release of the crucial second tranche hinges on China and other bilateral lenders restructuring their debt terms with Sri Lanka.

According to Daily Mirror, China initially participated in discussions with other creditors, including India and Japan, offering a two-year moratorium on debt repayments and even exploring the possibility of providing new loans. However, China later altered its stance, creating roadblocks in Sri Lanka’s efforts to secure IMF aid.

Other leaders from Africa, Southeast Asia, Central Asia and the Mideast will attend the Belt and Road Forum in Beijing. Russian President Vladimir Putin is also expected to attend. (ANI)

ALSO READ: Taliban to Join China’s BRI Forum

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Taliban to Join China’s BRI Forum

Taliban officials have attended regional meetings, primarily related to Afghanistan, but the Belt and Road Forum is one of the most prominent multilateral summits they’ve been invited to….reports Asian Lite News

Taliban will attend China’s Belt and Road Forum underscoring Beijing’s growing official ties with the administration, despite its lack of formal recognition by any government, the media reported.

Taliban officials and ministers have at times travelled to regional meetings, mostly those focused on Afghanistan, but the Belt and Road Forum is among the highest-profile multilateral summits it has been invited to attend, The News reported.

The forum in Beijing on Tuesday and Wednesday marks the 10th anniversary of President Xi Jinping’s ambitious global infrastructure and energy initiative, billed as recreating the ancient Silk Road to boost global trade.

The Taliban’s acting minister for commerce and industry, Haji Nooruddin Azizi, will travel to Beijing in the coming days, ministry spokesman Akhundzada Abdul Salam Jawad said.

“He will attend and will invite large investors” to Afghanistan, he said.

The impoverished country could offer a wealth of coveted mineral resources. A mines minister estimated in 2010 that Afghanistan had untapped deposits, ranging from copper to gold and lithium, worth between $1 trillion and $3 trillion. It is not clear how much they are worth today, The News reported.

China has been in talks with the Taliban over plans, begun under the previous foreign-backed government, over a possible huge copper mine in eastern Afghanistan.

Azizi will continue discussions in Beijing on plans to build a road through the Wakhan corridor, a thin, mountainous strip in northern Afghanistan, to provide direct access to China, Akhundzada said.

Officials from China, the Taliban and neighbouring Pakistan said in May they would like Belt and Road to include Afghanistan and for the flagship China-Pakistan Economic Corridor to be extended across the border to Afghanistan, The News reported.

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BRI partner countries opting for bailouts from IMF

The International Monetary Fund (IMF) . (File Photo: IANS)

After the IMF approved a $2.3 billion credit facility that April, however, Beijing began withholding payments to contractors on other Chinese-financed projects in Kenya…reports Asian Lite News

Fukuyama is Olivier Nomellini Senior Fellow at the Freeman Spogli Institute for International Studies and Director of the Ford Dorsey Master’s in International Policy at Stanford University…reports Asian Lite News

BRI countries are increasingly opting for bailouts from the International Monetary Fund (IMF), even though they often come with tough conditions, rather than trying to negotiate further relief from Beijing, wrote Michael Bennon and Francis Fukuyama in a recent article in Foreign Affairs.

Bennon is a Research Scholar and Manager of the Global Infrastructure Policy Research Initiative at the Center on Democracy, Development, and the Rule of Law at the Freeman Spogli Institute for International Studies at Stanford University.

Fukuyama is Olivier Nomellini Senior Fellow at the Freeman Spogli Institute for International Studies and Director of the Ford Dorsey Master’s in International Policy at Stanford University.

Among the countries that the IMF has intervened to support in recent years are Sri Lanka ($1.5 billion in 2016), Argentina ($57 billion in 2018), Ethiopia ($2.9 billion in 2019), Pakistan ($6 billion in 2019), Ecuador ($6.5 billion in 2020), Kenya ($2.3 billion in 2021), Suriname ($688 million in 2021), Argentina again ($44 billion in 2022), Zambia ($1.3 billion in 2022), Sri Lanka again ($2.9 billion in 2023), and Bangladesh ($3.3 billion in 2023).

Some of these countries resumed servicing their BRI debts soon after the new IMF credit facilities were put in place. In early 2021, for instance, Kenya sought to negotiate a delay in interest payments for a struggling Chinese-funded railway project linking Nairobi to Kenya’s Indian Ocean port in Mombasa.

After the IMF approved a $2.3 billion credit facility that April, however, Beijing began withholding payments to contractors on other Chinese-financed projects in Kenya.

As a result, Kenyan subcontractors and suppliers stopped receiving payments. Later that year, Kenya announced that it would no longer seek an extension of debt relief from China and made a $761 million debt service payment for the railway project, the article said.

Some analysts have argued that the BRI is not a cause of the current debt crisis in emerging markets.

Countries such as Egypt and Ghana, they point out, owe more to bondholders or multilateral lenders such as the IMF and World Bank than to China and are still struggling to manage their debt burdens. But such arguments mischaracterise the problem, which is not simply bad BRI debt in the aggregate, but also hidden BRI debt, the article said.

According to a 2021 study in the Journal of International Economics, approximately half of China’s loans to the developing world are “hidden,” meaning that they are not included in official debt statistics. Another study published in 2022 by the American Economic Association found that such debts have resulted in a series of “hidden defaults”.

The first problem with hidden debt occurs during the buildup to a crisis, when other lenders do not know that the obligations exist and are therefore unable to accurately assess credit risk.

The second problem comes during the crisis itself, when other lenders learn of the undisclosed debt and lose faith in the restructuring process. It does not take much hidden bilateral debt to cause a credit crisis, and it takes even less to shatter trust in efforts to resolve it.

China has taken some measures to ease the strain of these debts, hidden and otherwise. It has provided its own bailouts to BRI countries, often in the form of currency swaps and other bridge loans to borrower central banks.

These bailouts are accelerating, with one working paper published in March 2023 by the World Bank Group estimating that China extended more than $185 billion in such facilities between 2016 and 2021. But central bank swaps are far less transparent than traditional sovereign loans, which further complicates restructurings, the article said.

In its outreach to the Global South, China has institutionalized cooperation, provided serious financial support, and created domestic programs to more effectively implement policy.

In terms of institutionalisation, it has established the Forum on China-Africa Cooperation, the China-Arab States Cooperation Forum, and the China and the Community of Latin American and Caribbean States Forum, Michael Schuman, Jonathan Fulton and Tuvia Gering wrote for Atlantic Council.

Each of these forums has ambassador-level representatives, regular meetings, and working groups to facilitate policy coordination between China and other member states.

As for financial support, Beijing allocated nearly $42 billion to foreign assistance between 2013 and 2018, including grants, interest-free loans, and concessional loans. Of this, nearly 45 per cent went to Africa and 37 per cent to Asia.

In August 2022, China announced that it was waiving 23 interest-free loans to 17 African countries and also announced that it would redirect $10 billion of its IMF reserves to African countries, the article said.

At the same time, China has emerged as “the lender of last resort” to developing countries, undertaking 128 bailout operations in 22 countries between 2020 and 2021, for a total of $240 billion.

An important consideration, however, is the cost of a Chinese rescue loan: With interest rates at 5 per cent, it is more than double the 2% from the IMF, the article said.

Debt restructuring is a serious concern in the Global South, and how the PRC addresses it is being closely monitored. Sri Lanka, for example, owes China $7.4 billion, nearly a fifth of the country’s public debt. In Africa, Chinese lenders account for 12 per cent of external debt, valued at $696 billion, it added.

As the continent faces an array of challenges, ranging from climate change to political instability and economic inequality, experts disagree on how big an impact G20 membership will have as the African Union joins 20 of the world’s largest economies, VOA reported.

Robert Besseling, chief executive officer of Pangea-Risk, an intelligence advisory group based in South Africa and Britain, told VOA it is more of a symbolic development than a substantive event.

“The AU seat at the G20 will be meaningless,” Besseling said, if the African body cannot react decisively to events that include “the spree of military coups and irregular elections that have set back Africa’s democratic trajectory in recent months.”

Seven African countries have experienced military-led coups since 2020, most recently Gabon and Niger, raising questions about political stability, the lack of which makes it harder to address pressing issues like terrorism and food shortages in many countries, VOA reported.

Dennis Matanda, adjunct professor of American politics and international business at Catholic University said that Africa’s membership in the G20 could pay dividends, VOA reported.

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BRI’s Ambitious Goals Clashed with India’s Sovereignty Concerns

CPEC.

In all the joint declarations released after the SCO meetings in the past few years, India has opposed the BRI, even as other member nations have supported it…reports Asian Lite News

As Italy clearly indicated during the sidelines of the recently concluded G20 Delhi summit, that it plans to quit China’s Belt and Road Initiative (BRI), it reaffirmed the gradually evolving belief, that how economically unfeasible the whole project is proving to be for any of its supporters.

Though it managed to garner a lot of support from many central Asian and even European nations (like Italy), who saw a potential of boosting their trade in Asia through it, India has been a long standing opponent of the project.

The main thrust of India’s opposition to BRI has been that the China-Pakistan Economic Corridor (CPEC), which is part of the BRI, is a violation of its territorial integrity and sovereignty as it includes land that India claims as its own.

India has also pointed out at the lack of transparency and openness in the initiative.

India has been opposed to the concept of BRI, since it came under actual implementation in 2017.

Chinese President Xi Jinping had first conceptualised it in 2013, and it was projected as an initiative to promote economic growth and partnerships, benefitting all host nations who had signed up for it, while diplomatically it aimed at deepening international cooperation.

Officially, BRI focuses on improving connectivity and cooperation among Asian countries, Africa, China and Europe. It aims to enhance land as well as maritime routes. Several SCO member nations too support the initiative.

However India has always maintained that the CPEC which is a part of BRI, runs through Pakistan occupied Kashmir (PoK) and therefore is violative of India’s territorial integrity and sovereignty.

In all the joint declarations released after the SCO meetings in the past few years, India has opposed the BRI, even as other member nations have supported it.

The New Delhi Declaration issued after the day-long virtual SCO summit, which was hosted by India in July earlier this year, while reaffirming their support for BRI, Kazakhstan, Kyrgyz Republic, Pakistan, Russia, Tajikistan and Republic of Uzbekistan noted the ongoing work to implement this project, including efforts to link the construction of the Eurasian Economic Union and BRI.

India however, opposed the initiative.

Apart from territorial concerns, India’s trade concerns related to Beijing is another key reason behind it’s decision not to join the Regional Comprehensive Economic Partnership (RCEP), the trade deal signed by the 10 members of the Association of Southeast Asian Nations (ASEAN) and Australia, China, Japan, South Korea and New Zealand, a few years ago.

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IMEC Aims to Rival China’s Belt and Road Initiative

PM addresses at the Partnership for Global Infrastructure and Investment & India-Middle East-Europe Economics Corridor event during G20Summit, in New Delhi on September 09, 2023.

Prime Minister Narendra Modi called it “historic”. Other participating entities present at the announcement were the European Union, France, Germany, Italy, the UAE, and Saudi Arabia…reports Asian Lite News

IMEC, a new acronym born during the recent G20 meeting in Delhi, is the most ambitious project yet undertaken under the Partnership for Global Infrastructure and Investment (PGII), the US-led West’s response to China’s Belt and Road Initiative (BRI).

IMEC is a port-and-rail economic corridor connecting India, the Middle East and Europe. Thus the name, India-Middle East-Europe Economic Corridor (IMEC). Along the route, the plan is to run a cable for electricity and digital connectivity  

US President Joe Biden, the architect of the (PGII) hailed the project as a “game-changing” regional investment.

Prime Minister Narendra Modi called it “historic”. Other participating entities present at the announcement were the European Union, France, Germany, Italy, the UAE, and Saudi Arabia.

“It will be a clear demonstration of a new model that President Biden has pioneered for more transparent and sustainably — and sustainable develop — sustainable high-standard infrastructure that fills a damaging global gap and enables greater prosperity and better connectivity for key regions around the world,” Jon Finer, Principal Deputy National Security Advisor to the US president, told reporters ahead of the announcement.

The PGII was launched at the 2022 summit of the G7 countries in Germany, as a repackaged and rebranded version of the Build Back Better World — or B3W, as it was called — that was launched in 2021 at the G7 Summit in the United Kingdom. It was to be an unambiguous alternative to China.

A senior Biden administration official told reporters ahead of the G7 meeting on B3W that it will be a “a clear contrast with other global actors like China who are building infrastructure that locks developing countries into unsustainable debt traps and fossil-dependent infrastructure for decades to come”.

And that the B3W was born out of discussions held by Biden with his then British counterpart Boris Johnson on the need to “counter low-quality infrastructure development, like China”.

China’s BRI had locked recipient countries into impossibly high levels of debt. Non-payment of these loans could, and did, lead to significant surrender of sovereignty to the Chinese — like the Hambantota Port in Sri Lanka, which was taken over by China in 2018 for 99 years after Colombo failed to repay the loan taken for its construction.

The port was badly conceived and planned — some say it was found to fail, and it did — as many Chinese-funded projects around the world. 

The B3W was to provide value-based, quality infrastructure that is climate-friendly, sustainable and, unlike the BRI, most of the financing was to come from the private sector.

The goal was to close the gap of an estimated $40 trillion between the demand for and availability of infrastructure financing in low and middle-income countries. The plan ran aground, however, as Biden’s domestic plan that inspired it, called Build Back Better, foundered in Congress.

Biden announced the PGII at the 2022 G7 summit with a somewhat scaled down ambition of mobilising $600 billion, by the partner countries over the next five years. He committed $200 billion from the US. A number of projects were announced at the same time in Africa, the Middle East and Europe, making it clear the leaders were putting their words into action.

The Biden administration has also focussed, at the same time, on reforming the multilateral development banks such as the World Bank as an alternative to China’s predatory lending under the BRI.

A big part of this move was the appointment of Ajay Banga, an Indian-American, to head the World Bank, Biden administration officials have said. Under his leadership, the Bank is expected to offer itself as another alternative to China’s BRI.

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