The Belt and Road Initiative (BRI) is an ambitious development strategy launched by China in 2013 and is the cornerstone of President Xi Jinping’s foreign policy. The BRI aims to connect China to Europe, the Middle East, Africa and beyond via massive infrastructure projects. The BRI is the most ambitious global economic vision in recent history. The project involves a vast logistics and transport network, using roads, ports, railway tracks, pipelines, airports, transnational electric grids and even fiber optic lines. The BRI is China's ambitious push to increase global clout and is part of a “China Dream” of restoring the nation to past greatness. It appears on a scope and scale with little precedent in modern history. The BRI highlights a massive 4 trillion dollars in investments in 70 countries with a population of 4.4 billion people and up to 40% of global GDP It will soon be further extended to Latin America and the Artic sea. Six BRI corridors will operate: The China-Indo-China Peninsula Economic Corridor (CICPEC); the China-Pakistan Economic Corridor (CPEC); and the Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC); the China-Mongolia-Russia Economic Corridor (CMREC); the New Eurasian Land Bridge (NELB); the China-Central and West Asia Economic Corridor (CCWAEC).
These corridors will host energy and industrial clusters and will include rail, roads, waterways, air, pipelines, and telecommunications highways. The BRI includes the Silk Road Economic Belt which shall stretch from China to Europe and include several trade and infrastructure projects. The belts run through Russia, Mongolia, Georgia, Kyrgyzstan and Turkey, with two maritime terminals in Piraeus, Greece and Djibouti, Africa. China is building a $6 billion Chinese rail project that will connect China, Laos and Thailand. The 414-kilometer railway will link China’s Yunnan Province, and Vientiane, capital of Laos. According to plan, the China-Laos railway will be extended in the south to link Bangkok, capital of Thailand. And it will connect to Chinese railway network. It is also part of the Trans-Asian Railway, a project designed as an integrated railway network across Europe and Asia. The project is expected to be completed as scheduled by the end of 2021.
The BRI also includes the 21st Century Maritime Silk Road which shall be a sea-based network of shipping lanes and port developments throughout Asia and the Pacific. China's claiming of controlling stakes in strategic ports along critical shipping lanes -- what analysts have taken to referring to as its "string of pearls" -- beginning at the Straits of Malacca and dotting the Indian Ocean, should signal Beijing's ultimate ambitions. It intends to strengthen hard infrastructure with new roads and railways, soft infrastructure with trade and transportation agreements, and even cultural ties with university scholarships and other people-to-people exchanges. In all these ways, when much of the West is looking inward, China is connecting with the world. For China, BRI is also a grand project to project Chinese influence around the world. The country is still emerging from a perceived “century of humiliation” by Western nations and is only now returning to its rightful place in world affairs. There are other mundane reasons the BRI emphasis by China.
The BRI is now going beyond investments in actual projects. Today, China spends significant resources organizing BRI events, promoting BRI by massive propaganda in various media outlets, and conducting other outreach which includes various cultural programs and educational projects. Undoubtedly, BRI’s recognition within and outside China has been growing. Ultimately, the BRI is now just a catchword for China’s foreign and economic policy.
The BRI projects are now scattered in various countries around the world. Most work has been undertaken in Asia though. Chinese lending has increased significantly in the last twenty years or so. During 2000-2014 it totaled $354.4 billion, with lending highest in the transport and power sectors. Of these loans, about three quarters had commercial terms. The BRI encompasses countries with vast potential for economic development. But that potential has often been constrained by the underdevelopment of their infrastructure because of geographic factors and low financing capacity.
China spent nearly $1.5 billion in Sri Lanka building the Hambantota port .Beijing loaned Sri Lanka $200 million in 2010 for a second international airport and a year later a further $810 million for the extension of the port. $272 million was also spent for a railway in 2013 and more than $1 billion for the Colombo Port City project. These ventures hired mostly Chinese workers. The Chinese Harbor Engineering Company began 2018 with a $1 billion investment to build three 60-story office towers in Colombo. These are massive amounts for a very small impoverished country. China is building power plants and vast network of highways and railways, fiber optic connectivity and a sea port in Pakistan as part of a massive $62 billion worth of CPEC investment. The transportation networks built under CPEC will link seaports in Gwadar and Karachi with northern Pakistan, as well as points further north in China. The estimated $11 billion required to modernize transportation networks will be financed by subsidized concessionary loans.
Over $33 billion worth of energy infrastructure are to be constructed by private consortia to help alleviate Pakistan's chronic energy shortages. Over 10,400MW of energy generating capacity is to be brought online by the end of 2018. A network of pipelines to transport liquefied natural gas and oil will also be laid as part of the project, including a $2.5 billion pipeline between Gwadar and Nawabshah to eventually transport gas from Iran. China is committed to investing heavily in infrastructure projects to strengthen economic capacity and connectivity among nations within the BRI area and its own western regions. By investing in unstable countries in central Asia, China feels it can create a more stable neighborhood for China’s own restive western provinces of Xinjiang and Tibet.
Today, the BRI is investing in projects that include an international airport in Nepal and the $4 billion Africa’s first transnational electric railway, which opened this year and runs for 466 miles from Djibouti to Addis Ababa, the capital of Ethiopia. In Kenya, China is upgrading a railway from the port of Mombasa to Nairobi that will make it easier to get Chinese goods into the country. In Malaysia, China and working on infrastructure projects on the country's eastern seaboard. China's trade deal with the Maldives government included investments in developing the international airport and a bridge. China is establishing a foothold in Myanmar Rakhine State with its promise to develop a deep-water port at Kyaukphyu at a cost of about $7.3 billion. In Indonesia, China is constructing a high-speed railway between Jakarta and Bandung.
China's infrastructure investment in Europe is growing. The EU-China Connectivity Platform was launched in 2015, as a common framework to develop synergies between China's BRI and EU infrastructure projects. China is now financing more than a third of the $23.7 billion cost of the Hinkley Point C nuclear power plant in England. The project was added to the BRI to give added prestige. China is now buying cargo terminals in Spain, Italy, and Greece. It has bought the terminal in Zeebrugge, Belgium’s second-biggest port, marking it the Chinese first bridgehead in northwestern Europe. The port deals are one of the clearest manifestations of Beijing’s ambitious plans to physically link China to Europe by sea, road, rail, and pipeline. Today, China plans to construct train lines from Budapest to Belgrade, Serbia, providing another artery for Chinese goods flowing into Europe through a Chinese-owned port in Greece. The massive infrastructure projects in Asia, Africa and Europe form the backbone of China’s ambitious economic and geopolitical agenda.
Very recently, China outlined its ambitions to develop a "Polar Silk Road" of new Arctic shipping lanes opened by global warming. China is increasingly active in the polar region and became an observer member of the Arctic Council in 2013.The project is the latest extension of the BRI. For the past several years, China has viewed the polar region as a lucrative target for investment. A Polar Silk Road could yield great benefits for the local economies. In 2016, China bought a 9.9% stake in a liquefied natural gas plant in the Russian Arctic for $1.2 billion. The plant, located on the Yamal Peninsula, is majority-owned by Russia’s LNG producer Novatek. China will be the main customer for the gas produced. China has been gradually attempting to get a toehold in the Arctic since at least the 1990s.The country is increasingly a presence at Arctic diplomatic gatherings. Since 2013, China has had observer status at the Arctic Council, an intergovernmental organization that brokers polar agreements. In November, China was a key “non-arctic signatory” to an agreement to prevent commercial fishing in Arctic international waters. The region is set to become a multi-trillion-dollar hotspot of resource extraction and world trade. China’s growing profile in the region has prompted concerns from Arctic states over its long-term strategic objectives.
China is also expanding its influence in Latin America. The total annual trade between China and Latin America has increased from almost nothing to more than $200 billion by 2014. According to the Inter-American Development Bank (IDB), Latin America’s exports to China has also increased by around 30% last year. Today, China is the largest trading partner of Brazil, Peru, and Chile. China is financing a motorway in Colombia and upgrading a railway in Argentina.
Indeed, the BRI offers great local benefits. Areas in the developing world which have outdated infrastructure are receiving much needed funding and logistical help. The Chinese investments are very welcome and do result in improved relations as well. Chinese influence in Latin America is poised to grow further in the future.
Lately, the BRI has also attracted a lot of criticisms. Excessive Chinese control and lack of transparency is a frequent complaint about the BRI. Critics have said China is using the BRI to push its political and economic agenda in the developing world. Thus, many analysts are very ambivalent about the BRI and China’s future goals regarding it. The UK and the United States are both circumspect about the project. In fact, United States is very critical of BRI because it is viewed as being much more than mere infrastructure building and is seen as China’s expansion of its global influence and strategic interests Very recently, United States Secretary of State Tillerson claimed that:
“China, as it does in emerging markets throughout the world, offers the appearance of an attractive path to development, but in reality, this often involves trading short-term gains for long-term dependency…Chinese offers almost always demand the use of imported Chinese labor, large loans and unsustainable debt and ignore human and property rights.”
Recently, Pakistan, Nepal and Myanmar have canceled or sidelined three major hydroelectricity projects planned by Chinese companies. The rejection of the three projects, worth nearly $20 billion, comes as a serious setback to the BRI. Pakistan claimed tough financing terms imposed by China as the reason for the cancelation of the $14 billion Diamer-Bhasha Dam project. There has been criticism that both Sri Lanka and Maldives have taken a significant amount of Chinese loans which they cannot pay back. Nepal announced a decision to end a $2.5 billion contract for a hydroelectricity project, accusing the Chinese company of financial irregularities. Myanmar, which had halted a $3.6 billion Chinese-backed dam three years ago, declared that it no longer is interested in big hydro-electric power projects. Sri Lanka owed China $8 billion and couldn’t pay it back. Therefore, China took control of Hambantota port in Sri Lanka. The port now gives China a strategic access point into India's Ocean through which China can deploy its naval forces. This was all part of a determined strategy by China to extend its influence across the Indian Ocean at the expense of India. Through CPEC China wants to acquire military benefits, providing its navy future access to a strategic port at Gwadar on the Arabian Sea which is now managed by a state-backed Chinese company with a 40-year contract.
There is now a growing realization among poorer countries that Chinese offers to build massive infrastructure projects come at an extremely prohibitive cost. China sells its global project in very friendly terms, a mutually beneficial project for all. The BRI is a very ambitious project but suffers from lack of transparency and unwillingness to take into consideration environmental and human rights. Today, the fundamental reason is to utilize surplus industrial capacity and eventually BRI is about increasing China’s influence around the world. There are other reasons besides broad strategic plans. China is investing in infrastructure because it hopes to find a more profitable home for its vast foreign-exchange reserves, most of which are in low-interest-bearing American government securities. China hopes to create new markets for is companies and to export some of the country’s vast excess capacity in cement, steel and other metals.
The BRI has many problems but China is resolute to push ahead with it. Today, there are not many alternatives to Chinese-led infrastructure initiatives. It was the fear of Chinese dominance in Asia that prompted Japan to offer $24 billion in aid to the Philippines. Meanwhile, the United States is thinking of an alternate plan to the BRI and that will require closer cooperation with the Europeans and Japan. Undoubtedly, China is utilizing BRI for long-term gains as it finances dubious projects in corruption-ridden countries only for political reasons. In fact, Chinese companies benefit the most from the BRI projects: According to the Center for Strategic and International Studies, of all the contractors participating in Chinese-funded BRI projects, 7.6% are local, 3.4% are foreign, and a massive ?89% are Chinese companies. However, this does not mean to suggest that all infrastructure projects are not needed. Only that many are of dubious considerations and not affordable by these BRI countries. There is consensus that infrastructure projects are badly needed in nearly all the BRI countries and China is the only one lending in a big way today; and hence, the dilemma for the BRI countries. Also, the recent political developments in the United States favor the BRI. President Trump’s stance regarding climate change, global trade and engagement stands in striking contrast to China’s plans for the BRI. In all truth, the “America first” approach of President Trump is not looked at favorably by most of the world. Indeed, China is gradually creating its new image as the responsible global power. Given China’s rising status and decline of the US, more countries would join the BRI soon.
The United States should shun its policy of demonizing China and considering it as a rival like Russia. In all reality, the economic interests of the United States and China.are complicated connected. Both China and the United States have an abiding interest in creating a stable and efficient global political and economic order. Hence, The United States must partner with China to create the desired global orders. The world is changing fast with the rise of China and a new global political and economic global order is emerging. The United States must accept these economic realities. Therefore, it is better to partner with China to create a functional global system or a global order that is beneficial to all nations of the world. There is no alternate to United States cooperation with China and a subtle way to begin this by partnering in BRI. Although, BRI is also hubris and exploitation at times by China it is still wise for the United States to engage with China from within the framework than opposing it from the outside. In this way the crude exploitation can be checked and BRI be made more transparent and effective. Today, China is finding it difficult to identify profitable projects in several BRI countries. A big restriction in further BRI expansion is that these countries in Africa and Asia suffer from political instability, widespread corruption, weak and unstable economies, and poor public governance. In other words, the trillions of dollars that are desperately required for real global development are beyond China’s impressive capacity. Only a United States partnership with China can possibly make a true difference for global development. However, this would entail a major foreign policy shift by the United States, and the chances of that happening under the Trump administration’s watch are indeed low.
Dr. Sohail Mahmood is an Independent Political Analyst based in Raleigh NC.