Belt and Road Initiative (BRI)- A Game Changer

By
Sarmad Sadiq
-
0
Belt & Road Initiative
Belt & Road Initiative

Challenges and way forward.

Background

The Belt and Road Initiative (BRI) is a multi-trillion-dollar global infrastructure development plan announced by the Chinese government’s premier Xi Jinping in 2013 to invest in nearly 70 countries spanning 3 continents. “Belt” is short for Silk Road Economic Belt, which refers to the proposed overland routes, whereas “road” is short for the Indo-Pacific Sea routes through Southeast Asia to South Asia, Middle East, and Africa (EBRD, 2020). The estimated completion of the project will be 2049, coinciding with China’s 100th birthday.

The Benefits

The Chinese believed that the countries they were trading with had achieved some economic headway but further growth was hampered as a result of the lacklustre infrastructure, access and connectivity to these nations and that the full potential of transcontinental trade was not yet tapped into.

So, for China to enhance its trade growth it had to pursue such a giga-project. It set out to bridge this massive gap of infrastructure and capacity through a plethora of multi and bilateral partnerships with countries, under the umbrella of the One Belt and One Road Initiative, replicating the old silk road by building a new one (Chatzky, 2020).

The proponents of this project push the narrative of global development through the BRI. They posit that it has the potential to considerably improve trade, foreign direct investment, and living conditions for citizens in its participating countries (OECD, 2018). It is believed that through the massive influx of investment pouring into the member states, economic growth apart from infrastructure development and poverty alleviation will be expedited. The globalisation of trade and introduction of  equity in global infrastructure development, however, may be the most precious outcome of this effort.

The Drawbacks

There is another side to the story. Some believe that the project will pave the path to Chinese imperialism, a sort of economic hegemony through this project which would ultimately harm the poorest and most vulnerable nations (Ruta, 2018). Others argue that this prosperity will only be for China’s allies and not the world as a whole. They postulate that China will follow its economic dominance through boots on the ground, increasing their influence over foreign nations wherever the trade routes wind through. Many of these claims and assertions have weak foundations and are based on false pretexts, and a number of them  would be analysed and deconstructed in the literature that follows.

Purpose of this Report

Numerous aspects of the BRI can be discussed here, however, our discussion ought to be limited to economic prosperity through infrastructure development, the impacts of this project on geopolitics, the challenges it faces and the potential drawbacks of such an initiative. In this research report, I would be analysing these contrasting perspectives which have a variety of dimensions attached with them, based on years of comprehensive on-ground analysis and hypothesis-testing.

BRI as a means for Economic Prosperity

Many in the developing world believe that the BRI will be their path to salvation from the years of stunted growth and mediocre progress. The foundation of all modern human civilisation is the economy, despite the world being a tremendously complex and dynamic place.. That is why it is considered a quintessential metric to gauge a modern nation-state’s progress. Generally, the more economically stable or prosperous a nation is, the better it performs on key performance indicators and indexes used to measure the quality of life of a country. Despite the importance of the economy,, it differs significantly from other  metrics  like military strength,  partly because a stable economy of any country is desired by all stakeholders in the international community – but this might not always  be the case with a stronger military or ideology. Such desire for non-exclusive economic benefits is derived from the fact that a stronger economy of any country provides countless benefits to other countries and organisations symbolised by trade and exchange of cultures, ideas and knowledge.  Many developed nations make an exception to help or assist less developed nations since their interests are intricately linked, leading to the assumption that any economic cooperation between two states proves to be mutually beneficial.

The flagship project of the BRI i.e. The China-Pakistan Economic Corridor is to be analysed here on a primary level. It is often touted as “a journey towards economic regionalization in the globalised world for Pakistan” (CPEC, 2016); the nearly $62 billion investment is considered game-changing for a cash strapped country like Pakistan (Siddiqui, 2017). There have been significant developments in a few primary sectors. Pakistan, which recently faced deficiencies in the energy sector, now has a surplus thanks to the BRI investment. Many of these news sources include renewable energy, with the Quaid-e-Azam Solar Park in Bahawalpur a prominent example; though with the caveat that Pakistan cannot completely utilise that installed capacity surplus due to a few other factors. (Ebrahim, 2015). The infrastructure megaprojects of superhighways have enabled efficient transport, a multibillion-dollar rail project is also in the pipelines (Tribune, 2022). The BRI has equipped Pakistan to be a pathway for trade to China and Central Asia, while ramping up its infrastructure and providing its economy a fighting chance (Khursheed, 2019). The success of Pakistan’s economy is directly proportional to the success of the BRI. A major hurdle in the way of Pakistan’s economic growth – infrastructure – is being systematically dismantled and this region proves to have major potential to emerge as a strong global economy.

In other impoverished regions of the planet i.e., Africa experts estimate that China’s funding amounts to $5 billion per year. (Lucy, Hancock, 2018). Studies by Aid Data looked at the effects of China-backed infrastructure on the economies of African countries and the revelations found that “the positive economic spill overs of Chinese investment produced a more equal distribution of economic activity”.(Parks, Strange, et. al, 2018).  China’s contributions to many African countries’ development have become a central aspect of those countries’ development strategies (Foster, Chen, et. al, 2008). A few examples of China’s involvement in this region are a “2,600 MW hydropower scheme in Nigeria, $3 billion in telecom equipment to Ethiopia, Sudan, and Ghana, and major railroad projects in Nigeria, Gabon, and Mauritania”. When it is seen that the powerhouses of the global economy such as China, India and Bangladesh have reached a saturation point, Africa emerges as a promising contender for the next global economic hub. With the right direction and funding from the BRI, a new era of prosperity would unquestionably enter one of the most impoverished regions of the world.

Another such example of the brilliance of the BRI is the Khorgos Gateway which links Kazakhstan to China. It would be a feat itself, just by being the world’s largest dry port, but there is more to it: it is built on the furthest point from any ocean, known as the Eurasian point of inaccessibility (EPIA) (SCMP, 2016). It confers port-like amenities to the most landlocked country in the world. A railway line leads from here to the heart of Europe. This not only benefits Europe and China, but also significantly helps countries like Kazakhstan which lie on the Belt, enabling them to manufacture, produce, and trade with the world’s richest nations despite being hampered by the EPIA (Ruehl, 2019). Beyond the logistics hub, it will also consist of special economic zones to convince investors into building factories and warehouses, therefore breathing in a new age of development (Standish, 2019).

The fact of the matter here is that underdeveloped regions like Africa, Kazakhstan, and Pakistan are benefiting tremendously from the BRI, dramatically enhancing their economic development; none of which would have been possible without the BRI’s interventions.

The Challenges

A host of challenges await the BRI, struggling with quality, environmental standards, and transparent procurement processes and sustainability in infrastructure development. Apart from some basic barricades, the BRI faces a very specific set of challenges in member states. The Scientific Research Journal elaborates how it faces issues such as geopolitical instability in member states (e.g., Iraq, Afghanistan, Balochistan), geopolitical shifts in alliances and the susceptibility of these countries to rival influence (e.g. Nations turning to the Build Back Better program, departing from the BRI).

The west’s declaration of China as its top security concern will undoubtedly have an impact on several of the host countries; decisions made in the geopolitical epicentres of Washington and Brussels will inevitably filter down to places like Islamabad or Colombo.

All of this results in  a loss of investor confidence and a lack of interest from the private sector, hence diminishing its sole objective – that of economic prosperity. The pretexts of such apprehensions are in the vast majority of cases based on fallacies; some would even go on to say that it would be dangerous to claim that engagements with the BRI are harmful. The vastness of the scale of such a project negates the idea that it is a purely anti-west scheme (Risberg, 2017). The economic benefits which arise out of such an initiative are to be shared by the global community, including western democracies. Director of the Africa Program at the Centre for Strategic and International Studies, Judd Devermont, stated in a United States congressional hearing, “It is essential to draw a clear distinction between Chinese activities that threaten U.S. interest and those that are neutral or complimentary.”

In addition, it has been stated that the initiative’s recent growth makes it necessary for the Chinese government to partner with private investors to finance the project because even the Chinese government cannot fully support it for more practical reasons. However, since, historically and principally private investors have been averse to such a partnership, they definitely would be reluctant in investing in the BRI (EIU, 2015), slowing down the extensively praised rapid progression of the BRI.

The journal also mentions that geopolitical tensions may also hamper the BRI. It cites the example of the China-Pakistan Economic Corridor (CPEC) which passes through the globally disputed region of Kashmir, and perpetual tensions between the two nations which lay claim to this land may steer efforts into a dead end. In volatile regions such as Balochistan, also in Pakistan, it is hard to control the violence, especially that from insurgents which may cause significant infrastructure damage and may steer global trade away from those routes therefore diminishing its sole purpose (Jaleel, Nazia, 2017). This uncertainty is a pathway to disaster for the BRI because, as mentioned before, the already reluctant stakeholders would be hesitant to invest and be a part of this project.

The Geopolitical Angle

The BRI has been proclaimed by many as China’s new geopolitical strategy; aimed at bolstering new traditions of multilateral economic cooperation, expanding its own sphere of influence, and promoting China’s version of the new world order.

While it cannot be denied that at certain levels geopolitical influence would have been a part of the decision-making process, discounting all the other factors which have pushed this project to new heights would be absurd. We can ascertain this from the origins of the BRI; this initiative was never meant to be on such a massive scale, instead, China proposed the Silk Road Economic Belt and the Maritime Silk route separately at two separate events (Dave, Kobayashi, 2018). At that time, it served solely as a tool  for promoting bi- and trilateral growth and development would be fostered. Nevertheless, since then, it has grown in both scale and grandeur which inevitably lead to China’s influence in those regions surging, hence causing discomfort in certain elements of global politics.

In response to China’s expanding influence, especially in South and Southeast Asia, the western nations produced associations of their own; some were purely military alliances, while others were an emulation of the BRI. Case example: The Build Back Better scheme, recently launched as one of the many initiatives to compete with the BRI. While the global need for investment in infrastructure far exceeds the ability of any country to meet it alone, when the most developed parts of the world set to work together, there might be a ray of hope. (Standish, 2021). The same article further goes on to elaborate how COVID-19 would push the world’s economy into the worst recession since World War II and how “the world’s infrastructure needs – estimated at $94 trillion over the next two decades – are still unmet”. Any investment or aid to help the world develop is welcome and may not be necessarily viewed in a negative light.

However, the abject polarisation which looks menacingly upon world peace is an artefact not welcome. We have observed the resurgence of the world into different blocks and with the inking of agreements such as AUKUS and QUAD, not to mention the numerous bilateral military assistance programs such as the one seen in Ukraine, it would not be hard for us to gauge the repercussions if matters do get out of hand. In geopolitically volatile and strategic regions such as the Indo-Pacific, it appears that the US Indo-Pacific Strategy and China’s responses have ushered in a new bi-polarity which would adversely affect Asian nations who are caught in the midst of a rock and a hard place (Rashid, 2022).

BRI as a means for Global Hegemony?

Many put emphasis on the transparency, or the lack thereof in lending as well as the utter disregard for international lending protocols and practices which involve but are not limited to: procurement, transparency, and dispute resolution (Hillman, 2018). They assert that China is spreading a form of neo-imperialism through the so-called “debt-trap diplomacy”. This idea has been extensively paddled by western democracies and is one of the major arguments that opponents make for their case.

One such case that played up was the ill-fated case of Sri Lanka, where a multi-billion dollar loan was settled by constraining Sri Lanka to cough up a port (New York Times, 2018). Another similar case purported was that of Tajikistan, which had to cede thousands of kilometres of disputed territory in order to settle a payment dispute (Eurasia, 2018).

A plethora of reports by various reliable sources have further imparted on this as-well. Providing a response to the Hambantota Port mentioned before, the report by the Chatham House imparts on how the domestic politics in Sri-Lanka was quite volatile and their populist politicians were bent on constructing massive infrastructure projects which would appeal to the public eye as a standing ovation of the benevolence of themselves; aiding their re-election with complete disregard to the potential economic repercussions. Such initiatives were carried out with haste and with utter disregard to their planning and feasibility. Inevitably Hambantota Port turned out not to be commercially viable, generating massive surplus capacity and losses for the Sri Lanka Port Authority (Jones, Hameiri, 2020). The first phase was built between 2008 and 2010, followed by a second stage designed to make the port South Asia’s largest by 2014. In reality, the port was barely operational, with usage actually declining year-on-year. In 2016, it took just $11.8 million in revenue, versus operating expenses of $10 million (Grey, 2018). Sri Lanka’s finance ministry reportedly estimated the port’s total losses at $230 million for 2011–16 (Aneez, 2017). Local experts place the blame squarely on the government’s ‘incompetence and disregard of any commercial sense’ (Kulamannage, 2018). As a testament to idea presented before, even Sri Lanka’s own ambassador to China said: “Sri-Lanka asked for this project loan on our own. We were not forced to get this loan. […] It is very unfair to blame China or [EXIM Bank] or the firms that constructed the Hambantota port. […] It is a decision taken by the government of Sri Lanka […] if something was wrong in the decision, we are responsible (Global Times, 2018).” This only serves as further evidence  of how greed and selfishness on the part of host-nations can do to a very virtuous endeavour between two nations.  The optics projected by such albeit legitimate transactions do not play well, in fact they’re the perfect meal for propagandist and a pedagogical media which then whitewashes the general Populous in host countries and some with vested interests play it up, even though it might be no more than western propaganda. In addition to this:

On a secondary level, the apprehensions born out of western, whitewashed propaganda do really dent the levels of trust in China. This is evident by the many established players of the world economy also tilting towards China; a stringent example of this is the newfound economic cooperation between China and Saudi Arabia (Chen, D., 2021), as a matter of fact such cooperation and trust is only ballooning (Singh, S. V., 2022). These newfound friendships with China are just a testament to the fact that the BRI is merely a vehicle for mutual cooperation between nations and its member states’  strategic aims  are extremely objective

Conclusion

To conclude, I believe that the BRI is a plausible roadmap to achieve globalisation in the region and significantly bring prosperity in developing nations, despite its drawbacks and glacial pace.

In order for the BRI to be globally accepted we must address the issues it holds. The debt-diplomacy concern can be pacified by China allowing and working with other global lending institutions such as the IMF and the World Bank (WB) to finance the project, while also increasing the number of stakeholders in the project so that it  is not linked to China exclusively. We must also address the need for peace in the volatile regions in which the BRI would pass through,  by implementing peace-building initiatives there. For example, the hotly contested region of Kashmir where the China-Pakistan economic corridor passes through can be stabilised by brokering peace between Pakistan and India. Though some of these aims might be far-fetched, theyare necessary to adopt a long-term policy for governing the future of the Belt and Road Initiative.

The world is undergoing  a significant overhaul and it is increasingly becoming more interconnected. China has fuelled this the most in the past quarter century. At the end of the day, nations can weigh in their options and those who do would welcome it with open arms contrary to the popularised beliefs.

Bibliography

  1. ERBD. (2018). Belt and Road Initiative (BRI).

http://cpec.gov.pk/introduction/

  1. Richard Bluhm, Axel Dreher, Andreas Fuchs, Bradley parks, Austin Strange, and Michael Tierney, “Connective Financing: Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries,” AIDDATA, September 11, 2018.

https://www. aiddata.org/publications/connective-finance-chinese-infrastructure-projects

  1. Vivien Foster, William Butterfield, Chuan Chen, Nataliya Pushak, “Building Bridges: China’s Growing Role as Infrastructure Financier for Sub-Saharan Africa,” The World Bank, July, 2008. http://siteresources.worldbank.org/INTAFRICA/Resources/BB_Final_Exec_summary_English_July08_Wo-Embg.pdf
  2. South China Morning Post. (2019). Khorgos: the biggest dry port in the world. SCMP. https://multimedia.scmp.com/news/china/article/One-Belt-One-Road/khorgos.html
  3. The Diplomat. (2019, September 27). The Khorgos Hype on the Belt and Road. https://thediplomat.com/2019/09/the-khorgos-hype-on-the-belt-and-road/
  4. Standish, R. (2019, October 1). China’s Belt and Road Initiative Is Running Into Problems. The Atlantic. https://www.theatlantic.com/international/archive/2019/10/china-belt-road-initiative-problems-kazakhstan/597853/
  5. Risberg, P. (2017). The Give-and-Take of BRI in Africa. Csis.org.
  1. Solutions, E. D. (2014). One Belt, One Road. The Economist Intelligence Unit. https://www.eiu.com/public/topical_report.aspx?campaignid=OneBeltOneRoad
  2. China’s Maritime Silk Road: Strategic and economic implications for the indo-pacific region. China’s Maritime Silk Road: Strategic and Economic Implications for the Indo-Pacific Region | Centre for Strategic and International Studies. (2022, May 24).
  1. Sabahat, Nazia. (2017). Baloch Insurgency and its impact on CPEC. Munich Personal RePEc Archive. https://mpra.ub.uni-muenchen.de/90135/
  2. Dave, Bhavna and Kobayashi, Yuka (2018). China’s silk road economic belt initiative in Central Asia: economic and security implications. Asia Europe Journal.
  • Standish, R. (2021, November 30). Global Gateway: Can The EU’s Giant Infrastructure Plan Rival China’s Belt And Road? RadioFreeEurope/RadioLiberty.
  • Rashid, M. M. D. (2022, April 7). The US Indo-Pacific Strategy and China’s Response: South Asia Caught in Between? The Geopolitics.
  • Hillman, J. (2018). China’s Belt and Road Initiative: Five Years Later. Centre for Strategic and International Studies.
  • Grey, E. (2022, March 9). The story of Hambantota Port: a flunking token of political corruption. Ship Technology.