One Belt. One Road. Several Questions.
What is the commonality between a highway in Pakistan, a port in Sri Lanka, a freight line in Tehran and a bridge in Azerbaijan? These infrastructural projects are a part of China’s Belt and Road Initiative(BRI) which plans to deepen Chinese connection with Europe, Africa and Asia to facilitate economic development and cooperation between the regions. The Grand plan, which can be safely called the most ambitious infrastructural project in the modern world history encompasses over 70 countries, a quarter of global gross domestic product(GDP) and half the world’s population. BRI is arguably the boldest effort undertaken to realise the “Chinese dream”, a vision put forth by President Xi Jinping to make China the world’s next superpower. The plan has two parts, a land belt which connects major cities along the ancient silk route and a 21st-century sea road which plans to connect South and South East Asia with China. The plan is much more than just about economics, it is an attempt to solidify China’s position in global politics. This article gives an insight into how China is ‘selling’ the BRI to other countries, the benefits accruing to China from this plan and finally, the response from other countries to the BRI.
How is China selling the BRI to other countries?
The Chinese narrative for the initiative is primarily centred around economic prosperity for all partner countries and enhancing regional cooperation among them. Simply put, China believes that are mutual benefits for all countries, in a world where trade is centred around China. It also claims that the BRI would pave a path for greater cultural exchange and world peace. However, it does way more than just advertising the incentives for countries to partner this mammoth initiative.
China is currently providing massive loans to partner countries including Pakistan, Myanmar, Laos, etc in order to fund the requisite infrastructure to sustain the initiative. This includes the construction of highways, bridges, freight lines etc. These contracts are mostly furnished by Chinese construction companies which failed to find a market in China. This provides partner countries, most of which are developing and underdeveloped with prospects of much needed infrastructural growth and job creation. In developing economies, infrastructure is the main engine of growth, hence seeing the possible economic benefits of this initiative at a time when the global economic growth is deaccelerating, these countries are prompted to partner the initiative. However, it would be inaccurate to view this in isolation, there are several other factors which prompt a favourable response from the other countries. These include the considerable relaxation in regulations on funding for infrastructure. China has significantly reduced the environmental regulatory hurdles, which allows partner countries who avail Chinese funding to bypass these laws made to protect the environment. This is true in the case of social regulations as well. The Chinese position adheres to the laws and regulations of the host country, however, it is crucial to note that the implementation mechanisms of these systems have several loopholes due to weak governance and are often substandard to the global metrics. China has also undertaken internal institutional adjustments to support the BRI. It has pumped significant capital into Chinese public financial institutions. These banks provide loans at low borrowing costs with very low interests rates, thus incentivising Chinese companies to undertake construction projects abroad. This also enables Chinese companies to have an upper hand in competitive bids over foreign companies which might face financial constraints.
China has also taken a diplomatic measure to promote the BRI, making it the highlight of its foreign policy. It has become omnipresent in Chinese international discourse, and included in issues such as environment (for example the BRI International Green Development Coalition), to ensure that the plan is made visibly comprehensive and ubiquitous in dialogue. Finally, China has released several promotional videos starring Chinese children educating people about the BRI and a series of podcasts informing listeners about the benefits of this plan. These measures might not have a significant impact, but they ensure that no stone is left unturned in marketing the BRI.
How China benefits from the BRI?
Ever since China opened up its economy to the world, it has not looked back. The BRI is also about further opening up of the Chinese economy and its deeper integration in the world economy. Hence the economic benefits to China are obvious if the plan becomes a success. At a point in time when the Chinese economy is slowing down, the BRI will in more ways than one, stimulate recovery from the slowdown. It provides new opportunities to Chinese companies which failed to find jobs back home. It is also claimed that western Chinese provinces which are comparatively underdeveloped and have a lower income will benefit from the creation of trade connectivity and infrastructure. It also promises a bright future for construction and raw material related industries like cement, steel etc. If successful, it has the potential to reshape world trade and put China right at its centre.
However, since it is very early to determine the success of the initiative, the economic benefits, in the long run, can be only predicted and not ascertained. However there are other avenues in which China has already begun to gain from, it can use its sheer economic strength to leverage countries to act in ways which garner significant political gains for China. Many partner countries in the BRI are developing and under developing with unflamboyant track records of poverty, employment, foreign debt, etc. China is loaning millions to such participating countries and there is a plausible propensity that some countries won't be able to repay these loans. In such cases, China can dictate these countries’ behaviour, for example, by demanding “strategic aloofness” on human rights violations in China or using this situation to negotiate territorial disputes.
When Tajikistan was unable to repay its debt, China waived it off in exchange for disputed territory which coercively settled a century-old border dispute in China’s favour. Similarly, when Sri Lanka was unable to repay its debt, it gave full control of the Hambanthota port to China, which it has now converted into a dual-use military-commercial port. This behavioural pattern in Chinese conduct of foreign policy is popularly called ‘debt-trap diplomacy’. It raises concern over the considerable leverage which China can have over its partner countries and how it can use it to further its interests. The avenue of China being able to gain strategic concessions from other countries significantly increases when considered alongside a successful BRI, which would eventually solidify the notion of China being ‘the hegemon of the east’. But this is also something that China presently desires. Apart from the economic, cultural and regional benefits which are portrayed as the tipping point of this plan, there are diplomatic and strategic interests which reveal the serious Chinese intentions to change the power structures and establish itself as a superpower in the world.
What has been the reaction from other countries to the BRI?
The BRI, which was initiated in 2013, now has more than 71 partner countries. The Belt and Road Forum, a two edition event organised by the Chinese government to drumroll support for the initiative was attended by representative heads of several countries. Russia has been a strong supporter of the BRI and wishes to further increase its involvement in the Eurasian region to implement the plan. It sees the BRI as an opportunity to realise its ambition of a stronger Eurasian Economic Union. Several European countries have also partnered the initiative, these include Italy, Luxembourg, Switzerland, etc. The positive European reaction is also because of the shift in the economic policy stance of the United States, with Mr. Trump recently calling the European Union an ‘economic foe’. On the face, it tells us that it has become a widely supported plan. However, there are several concerns among certain countries which reveal their entrenched scepticism for the BRI. India was one of the first countries to voice out its concerns about the plan, it holds the view that the plan is an attempt to fabricate a neo-colonial enterprise which lacks transparency and is an attempt to gain control over economically vulnerable nations. Few Countries, while not challenging the economic viability of the plan, are still reluctant in fully supporting it, due to the possible expansion of Chinese influence. These countries include Australia and Myanmar, the former has not aligned its state infrastructure fund to the BRI and has blocked multiple investment bids by Chinese State-owned Enterprises, while the latter has halted construction of a major dam project which was a part of the BRI and has shown hesitation to Chinese Investment. Another concern for the Chinese government is the underutilisation of the newly constructed infrastructure. For example, an oil refinery in Kyrgyzstan has faced problems with overcapacity, thus raising the economic costs significantly at present. This coupled with the hurdles in repayment of Chinese loans can make partner countries rethink about their position. It is still very early to give a conclusion on the success of this grand plan. Only time will tell us if this Trillion dollar project pays off.
