Where is China’s Belt and Road taking the world?

23 February 2021 – Diana Arachi and Mukesh Kapila

Photo by Jou00e3o Cabral on Pexels.com

China is no longer in China, it is everywhere.

The Belt and Road Initiative (BRI), announced in 2013 by President Xi Jinping, has evoked extraordinary interest; digital search shows more than two million Google Scholar and nearly a billion Google results.  It is the largest infrastructure and trade project in history and claims to connect the world via integrated markets, economic cooperation, and trade and investment for greater  prosperity for all.

The world was curious but sceptical when it started.  However,  thanks to the rapid execution and delivery of many megaprojects, the list of BRI signatories has doubled over the past five years to around 140 countries across all continents. The addition of many higher-income, better-governed, and democratic countries has partly diluted the earlier argument of China preying on susceptible countries.

In principle, who would be opposed to infrastructure investment? But critics have compared BRI to a neo-colonial expansion of China’s post-Mao economic model. After all, the People’s Republic is an economic superpower that has witnessed continued GDP growth while lifting millions out of poverty.

To sustain its own growth, China needs the BRI to open up large foreign consumer markets. Thus, the BRI approaches development co-operation through an infrastructure and transport lens. Connecting the world, the China-way, offers benefits for China to import valuable resources from its partners while exporting its surplus low-cost goods to emerging markets.  Plus the bonus of gaining geopolitical influence. Unsurprisingly, BRI investment and aid projects are usually funnelled through host-country Ministries of Commerce – signalling that its loans and aid are predominantly business-focused.

Seven years on, BRI’s impact is of burgeoning interest to policy makers, politicians, and anyone wanting to join the bandwagon. International authorities like the World Bank and OECD as well as think tanks and consulting firms, have published nuanced views on BRI indicating that signatories should overall benefit from it.

The anti-China rhetoric that accompanied the early phase of BRI roll-out is being fine-tuned  with the realization that China as a force is here to stay.  Some analysts have downplayed China’s debt-trap diplomacy arguing that most signatories have a diversified funding pool, and turn to Western donors and multilateral banks for social projects while liaising with China for larger transport and infrastructure projects. These views, however, suggest an element of choice for beneficiaries which, for many poor and vulnerable nations may be more apparent than real as they desperately hunt around for investments.

One advantage that China offers is lesser bureaucracy than Western financiers because it does not ask inconvenient human rights, social-environmental, and financial transparency questions. That is welcomed by the less-scrupulous governments who must, in return, agree to pay an interest premium for Chinese loans compared to loans from Western donors or international financial institutions.

As the owings of developing countries to China have mushroomed (full data are not available due to the lack of transparency on the part of both China and recipients), debt sustainability is a mounting concern, exacerbated further by the impact of COVID-19 economic shut-downs.  China has given some short-term debt relief but it does not belong to the Paris Club of creditors, and sets its own rules and ethics. How Beijing will behave when some countries can’t service their expensive loans is an unanswered question. Will the loans be converted into strategic extra-territorial acquisitions? 

Sri Lanka, as a coveted geopolitical outpost of China,  is a case in point. Since the end of the three-decade separatist war there, China’s role in the Indian Ocean has received much attention for its infamous debt-trap led extraterritorial approach. However, within Sri Lanka (and many African countries) the response is mixed – China is both the land grabber, the political influencer, the military supplier and the friendly brother capable of fuelling long-awaited economic growth.

The Chinese Exim Bank sponsored Lotus Tower is seen as a metaphorical seed for Sri Lanka’s rebirth – blooming out of its war-churned soil as South Asia’s largest tower. It is a landmark in the rapidly urbanizing capital near another Sino-Lankan initiative – a land reclamation project advertised as South Asia’s answer to Dubai. The 270 hectare port city is partly co-owned by Chinese investors for an initial lease of 99 years with an option to renew (ownership terms and titles keep changing). Mockingly, Sri Lanka may perhaps soon be known as Szechuan Lanka, as both hard and soft powers expand via Chinese language training centres and Confucius Institutes rolling out across the nation. Chinese interest rates to Sri Lanka amount to around 6% compared to <3% soft loans from multilateral banks.

The story of Sri Lanka is similar to many income-strapped BRI signatories who face debt-servicing complexities and consequent loss of sovereignty. However, Sri Lanka’s strategic location allows it to reap benefits from multiple countries vying for commercial development and political collaboration to counterbalance Chinese presence. Not all BRI-signatories enjoy this advantage.

Critics of the BRI trajectory note that China targets mostly susceptible (low income, highly corrupt, conflict ridden and FDI-poor) countries. At the 2015 Forum on China-Africa Cooperation, China announced USD $60 billion in unconditional financial support to 48 of  54 African countries. Six countries that held diplomatic ties with Taiwan were excluded from that list. The message was not lost on others. Recently, Guyana revoked Taiwan’s representative office due to alleged Chinese pressure. Debt-trap diplomacy, human rights violations, labour rights, environmental concerns and disregard for the 1955 Bandung Principles of self-determination, mutual respect for sovereignty, non-aggression, non-interference in internal affairs, and equality, are all evident.

Generally, China is not known for altruism but the China Aid database may suggest otherwise. Earlier this year, China relieved/cancelled (depending on which news you follow) some of DR Congo’s $25m debt and offered medical aid for COVID-19 relief. Not surprisingly, DRC soon became a BRI signatory. This move can be interpreted as a soft power strategy to rebrand from debt-trap perpetrator to debt-relief saviour. China’s spin that it is the leading development agent in many neglected countries becomes evident for anyone following Chinese mass media.

Needless to say, China is predictably relentless in deploying its mighty diplomatic machine to secure the goodwill of BRI signatories. But, as provinces in China are responsible for funding certain BRI countries, the quantity, quality and longevity of investments and aid (whether infrastructure, medical or human resources) can differ vastly. 

However, China is not totally insensitive to increasing world attention. At the second  Belt and Road Forum in 2019, it spoke of more sustainable practices in loan allocation, environmental sustainability and equitable partnerships. But the rhetoric is shallow as BRI client-signatories know that there is a cost to opposing China. In a recent UN forum, 53 countries, mostly non-European BRI signatories, supported China’s security crackdown in Hong Kong.

The world is at an uncomfortable crossroads with China. Its trade and investment are welcome, its extra-territorial muscle-flexing and non-transparent economic behaviours, less so. But BRI recipients don’t have the power to contest objectionable deals.

Meanwhile, those who could question the equity, access and sustainability of BRI projects have been muted. These are the multilateral bodies with global stewardship and norm-setting duties who have become steadily Sinocised. Already on the UN Security Council, China’s nominees or proxies occupy leading strategic roles in many powerful UN organisations. Multilateralism is splintering or being re-shaped both by China’s belligerence as well as those reacting against it. This was seen most recently in controversies around WHO and COVID-19 origins.

Even as a new Chinese vision of interaction among nations is speeding down its Belt and Road, the original South-South co-operation that marked solidarity among poor, once-colonised nations has shifted more into China-South cooperation.  The trending Chinese role model is that of an authoritarian goliath that can make its doctors and billionaires disappear, while protecting favoured war-crime offenders and military regimes elsewhere. In that regard, it can rely on return favours from its BRI clients in multilateral fora on contentious concerns including Uyghur rights, Taiwan and Tibet.

But China is also the country capable of building large, fully equipped hospitals within days,  developing COVID-19 vaccines at speed, and sending probes to Mars. Whether it’s intent is to redraw world  networks for the betterment of all, or to spin a political web to ensnare its critics may be two sides of the same coin.

The potential benefits of new BRI linkages have scope to be utilized positively if economic transactions are balanced by genuine social development. Disturbingly, recent developments in Myanmar suggest, in a strikingly similar manner to 2009 Northern Sri Lanka, the future fate of the Rohingya under a China-backed military regime. What happens to democracy when a country is plunged offline? What risks do advantageous port locations pose to a country’s sovereignty and individual lives and liberties? How can a China-neutralised world step-up when it is critically needed before violence erupts? In what capacity can questions be raised in a world where an UN-inspired BRI body in support of China is already so influential and controls the story-line?

More recently, BRI’s transmogrification is taking it even further into cyber and outer space while, on terra firma, its COVID-19 vaccine diplomacy along the Belt and Road is demonstrating its determination to leverage worldly misfortunes. Thus,  certain  questions get more persistent. What kind of BRI projects are being proposed, when and how,and under which terms and conditions are certain agendas sold by China? For those trying to make informed assessments,  it is  vital to rely not just  on sceptical Western media, but also to study Chinese news sources because they are state-controlled and, therefore, reflect Beijing’s official or preferred narrative.  It is equally important to monitor what is happening within signatory countries, particularly in terms of economic transparency, human rights, and democracy.  BRI countries should also be helped to conduct independent cost-benefit analyses to make their own informed and un-pressured decisions.

Will greater world scrutiny oblige China to curb its predatory practices and demonstrate the sincerity of its claim that the BRI is a global good, without fear or favour?  This remains to be seen but is unlikely: recent experience and prevailing geopolitics indicate that it is hard for a China-dependent world to assert leverage or enforce accountability.

Today’s BRI – the modern Silk Road – is the latest in a long line of  ‘silk roads’ going back more than two millennia. Previous versions reflected the power structures of their times even as they re-shaped the worlds they inter-connected.

Today’s Belt and Road Initiative is no different in many ways but very different in at least one important aspect. While the old silk roads meandered everywhere, this one appears to lead only to Beijing. Those rushing along it should open their eyes wider, the closer they get to the destination.  They should also expect the ride to get more bumpy.

Published by Mukesh Kapila

See http://mukeshkapila.org

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