The hidden cost of partying with the pig

Does the ghost of Admiral Lord Nelson realise that we have entered the Year of the Pig? His statue stands atop a famous column in the heart of London, a tribute to his glorious victory at the Battle of Trafalgar in 1805.

This February, Trafalgar Square was the scene of a huge party to mark the start of the Chinese New Year. If Nelson was looking down through his one good eye, he would have seen a colourful procession of entertainers from China, including singers from the Peking Opera, some well-known pop stars and troupes of dancers and drummers. There were plenty of lions as well and – of course – many pigs.

The party, paid for by the Chinese propaganda department, cost millions of pounds. It carried a simple message: make friends with China and the benefits of international trade will flow your way.

Signs beside the stage drew the audience’s attention to the Belt and Road Initiative – China’s ambitious plan to restore the ancient silk trade routes taking goods from East to West. The project stretches all the way to London.

The Chinese party in Trafalgar Square was not about political debate: it was a celebration, designed to show China in the best possible light. Yet, elsewhere in London and throughout the world, serious questions are being asked about the implications of the project.

China is keen to present the Belt and Road Initiative as a series of win-win deals and draws attention to the countries and international organisations which support it – more than 80 in all, many of them in Asia.

But the project has turned out to be divisive. It has highlighted the sensitivities of old rivalries between countries both in South Asia and in East Asia, and has also showed that many small nations in the region are entranced by Chinese money.

The major sceptics are the big countries – most notably Japan and India.

That creates tension, even danger. If the Indian Prime Minister Narendra Modi and the Chinese President Xi Jinping cannot agree on the BRI, it raises the risk of simmering tension along their border, which could escalate into armed conflict.

The main reason for India’s animosity is that the Chinese money could empower Pakistan. In total, Beijing is loaning Pakistan around 60 billion dollars for projects on the China-Pakistan Economic Corridor (CPEC). This includes the development of the Port of Gwadar, which is also receiving funding from Saudi Arabia.

India is feeling the heat and there are warnings about the threat to the nation’s security. India’s vulnerability was highlighted by the recent attack on military police in Kashmir, which killed 44 people. The Pakistan-based militant group Jaish-e-Mohammad has claimed responsibility.

Japan’s view on the BRI is less hostile than that of India but nevertheless shows its longstanding rivalry with China. Japan thinks China’s whole approach to trade and international investment is too idealistic, too short-term and poorly thought through from a business perspective.

In most cases, the money for infrastructure projects comes in the form of loans from China. Some Asian countries have been pressed into accepting these loans, even though they were not in their national interest.

Chinese money initially makes the borrower feel vindicated. At last, someone is prepared to bank on their future. Many of the poorer Asian countries struggle to win investment from other sources, especially if they have recently suffered from financial problems or conflict.

However, Chinese money will not buy them out of trouble. If the loans are not serviced, China will demand collateral – as Sri Lanka has discovered to its cost. Sri Lankan politics remain in a state of chaos.

These are the realities of doing business with the Chinese and trying to fit in with a foreign policy drawn up by the Communist politburo. What looks like a welcome gift can quickly turn into an unwelcome burden. Still, when the party is in full swing, people tend not to think about the implications for the days to come.

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