Belt and Road: benefit or threat?

The world’s nations are divided as to whether China’s Belt and Road Initiative is simply an investment in transport and trade infrastructure, or an attempt to increase Beijing’s global influence. Nicholas Nugent weighs up the evidence

China’s president Xi Jinping coined the term ‘Belt and Road Initiative’ (BRI) in 2013 to describe China’s overseas investment in infrastructure on land and sea. Grandiose projects it embraced had previously been known as One Belt One Road, or a New Silk Road but the thrust was similar: China’s investment in projects which promote trade across the Eurasian landmass and Africa. Power projects to boost the supply of electricity in poorer countries were also included.

When countries such as Tajikistan, Pakistan and Sri Lanka faced difficulties repaying loans, China was accused of ‘debt trap diplomacy’. China excused some debts, making the BRI seem more like aid than investment. But its apparent magnanimity was double-edged as there was a feeling that the Chinese had simply found a way to get rid of their surplus production – of steel and cement, for example – and to provide jobs for Chinese workers.

Yet these concerns did not prevent large numbers of countries signing up. At the second Belt and Road Forum in Beijing in April, 126 nations were represented, 37 by their heads of government, including Vladimir Putin from Russia, as well as many international organisations, among them the UN, represented by Secretary General António Guterres.

Ethiopia, Pakistan, Sri Lanka and Bangladesh, for example, have already benefited massively from BRI investment. Pakistan’s Prime Minister Imran Khan told the forum how it had given a huge boost to his country’s electricity generation.

Nevertheless, obligation to China remains an issue for many of the BRI’s beneficiaries. Indeed, three countries which have recently changed their governments – Pakistan, the Maldives and Malaysia – have all reduced the scope of projects to limit their indebtedness.

President Xi tried to allay some of these and other concerns expressed at the forum by promising transparency, sustainable ‘high quality’ growth and financial accountability, as well as zero tolerance towards corruption, an issue in some projects. He agreed that project investment need not come only from China.

There is some confusion regarding what exactly the BRI embraces. Is it, for example, all Chinese investment overseas – and perhaps some at home, such as a high altitude motorway being constructed in Tibet? In the absence of a clear project list from China, the data company Refinitiv has tallied project commitments worth a massive US$3.75 trillion. But not all of these will go-ahead. They include Chinese investments in India, which has not signed up to BRI, as well as a nuclear power station in the United Kingdom, also not a signed-up partner, though its Finance Minister (Chancellor of the Exchequer) Philip Hammond did attend the April forum, as did senior ministers from France and Germany. Mr Hammond told the Forum that the UK ‘is committed to helping to realise the potential of the BRI and to doing so in a way that works for all whose lives are touched by the project’.

Notable forum absentees included India, which regards BRI investments in Myanmar, Sri Lanka and Pakistan as an attempt to encircle it. New Delhi is especially suspicious that China may be planning military bases. Its first such base is in Djibouti and it is said to be considering plans for Pakistan (where BRI investment to date has been greatest), Afghanistan and Vanuatu in the Pacific – ostensibly to protect investment in land and maritime routes.

Bruno Maçães has described the BRI as 'a dagger' aimed at the heart of Western economies and societies
Bruno Maçães has described the BRI as ‘a dagger’ aimed at the heart of Western economies and societies

Also absent from the forum was the United States, which is engaged in a ‘high stakes’ trade war with China, and has strongly opposed what it calls the latter’s ‘colonisation’ of islands in the South China Sea. The last thing Washington wants is for China to extend its colonisation across Asia and the Pacific, let alone Africa, Latin America and the Caribbean.

BRI is President Xi’s signature project and he has worked exhaustively to persuade doubters like India to come on board. But is there more to it than a desire to boost trade and improve access to scarce mineral resources, which is undoubtedly China’s main gain? A former Portuguese government minister, Bruno Maçães, has outlined a thesis that BRI is the first stage in the building of a New World Order with China at its centre.

In his book Belt and Road: A Chinese World Order, Maçães describes BRI as ‘the Chinese plan to build a new world order replacing the US-led international system’. Noting Chinese companies enjoy advantages in high-speed railways, highways, ports and energy production – the main focus of BRI projects – he says: ‘Whoever is able to build and control the infrastructure linking the two ends of Eurasia will rule the world.’

Describing BRI as ‘a dagger’ aimed at the heart of Western economies and societies, Maçães quotes the boss of multinational electronics firm Siemens, Joe Kaeser, who asserts that ‘China’s Belt and Road will be the new World Trade Organisation – whether we like it or not’.

Maçães’s argument is persuasive. Just as the US led efforts after the Second World War to rebuild Europe through its Marshall Plan, so the BRI can be seen as China’s own effort to support development on all continents with a mix of self-interest and altruism. Some see the BRI as China’s main weapon in a tussle with the US for global influence. Chinese banks are on the way to overtaking the World Bank as principal sources of Third World project financing and it is possible to envisage a time when the US dollar is no longer the international unit of account.

So should the initiative be regarded as aid? To some extent it is and, interestingly, China was reported before the forum to have asked the UK, a major provider of development aid to the Third World, for advice on how to lend to poor countries without imposing crippling levels of debt.

Yet there is another, less altruistic aspect. Some of the countries China wants to help in Africa are sources of minerals like lithium and cobalt, important for mobile telephones and battery-powered cars. Its ‘Corridor’ projects through Pakistan and Myanmar give China cheaper and speedier ways to transport oil from the Gulf, while investments in Central Asian infrastructure enable Chinese goods to reach Europe at lower cost.

In North Africa, China has invested in what President Xi calls ‘the digital Silk Road’ – a cyber superhighway connecting Egypt to Morocco. While the US tries to persuade other countries to boycott Huawei over security concerns, this Chinese high tech company is playing a major role in bringing internet connectivity to Africa.

The bulk of BRI investment will continue to be in Asia where it is gradually changing patterns of trade on land and sea. Connecting Peshawar and Kabul by motorway, for example, or the southern Chinese city of Kunming to Singapore by rail, will make a massive difference to the way trade is conducted, as will the building of roads, railways and pipelines through traditionally closed terrain like the Himalayas. Through BRI, Beijing is taking financial control of a continent that historically has received most foreign investment from former colonial powers or the United States.

Nicholas Nugent writes on Asian politics, diplomacy and trade   

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