28 April 2019

China’s Belt and Road Initiative: From Arctic to space, How China plans to expand its global footprints

By Srikanth Kondapalli

China is holding its second summit meeting at Beijing to deliberate and decide on further the course of the 2013-launched Belt and Road Initiative (BRI). Over 40 leaders, 5,000 people and one hundred institutions from across the globe are expected to attend the meeting as compared to 29 leaders and 1500 participants at the first meeting in May 2017. China received a shot in the arm with Italy endorsing the BRI recently.

The figures are impressive. China’s leaders mention about the cumulative “strength” of the BRI by suggesting that it has already amassed over $20 trillion in combined GDPs, half of the population on the earth, more than half – 126 countries with more African than Asian – have signed inter-governmental documents with China on the BRI projects. The Asian Infrastructure Investment Bank membership has gone up to 97 countries.

China had also hyped up the BRI to include many subjects under the sun. It stated that the BRI will be expanded to the Arctic to make it Polar Silk Road, raising concerns in the region. Its Digital Silk Road idea showcases advances in hi-tech communications technologies, although it is mired in the Huawei 5G controversies and cyber attacks. The Green Silk Road has been attractive for efforts to reverse emissions. Its Educational Silk Road proposes tie-up with 81 educational institutions in many countries with $39 million to be spent on scholarships. Yet another is the “Space Silk Road” providing Beidou-series’ global positioning system.

China showcases the economic angle of the BRI. Over 1,800 projects of the BRI are underway with over $80 billion in direct investments in non-financial sectors. China had invested about $30 billion in over 80 industrial parks abroad. The initial outlays of $800 billion are yet to be invested – partly due to the reassessments on financial risks.

At the moment, three projects have seen the light, including the Mombasa-Nairobi railway line, Belgrade-Hungary railway, Khalifa port in the UAE and Hambantota in Sri Lanka, in addition to 7,000 cargo trains to Europe.

These projects have elicited concern as well. China’s threat to take over Mombasa port if Kenya is unable to pay $2.27 billion in debts reminded the experience of Sri Lanka which parted Hambantota for 99 years to China. Likewise, Pakistan had withdrawn from $14 billion Diamar-Bhasa dam on Chinese terms. Malaysia’s threat to walk away from a rail project worked with China lowering interest rates.

The average liability and debt ratios for China’s lending agencies has also been higher – as Luo Ruogu of the EXIM Bank stated – at 35 and 126 percent far above the global ratios of 20 and 100 percent respectively.

The 2nd BRI forum will take stock of the last five-and-half years of its journey, with criticisms on unilateralism, disturbing sovereignty, predatory financing, opaqueness and environmental degradation – points that India, the United States and other countries raised. A mid-course correction is possible, but Beijing is unlikely to relent on the core aspects of the BRI.

For this has become the pet project of China with consequences for power transition at the global and regional levels. The sub-theme of the 2nd forum says about creating a “community of shared interests” – a euphemism for deeper and perhaps binding partnerships short of alliances.

The forum will also consider recent geo-political pushback, although foreign minister Wang Yi recently discounted to any such elements in the BRI. However, recent trends in the US – China rivalry on the global and regional leadership issues, Huawei, ZTE, tariffs, South China Sea, Taiwan and Tibet suggests to otherwise. Likewise, China’s deployment of “security guards” to protect the BRI projects opens a new element of deployment of troops abroad – a feature that questions the fundamental foreign policy tenets of the country.

In the last four decades, China had banked on “economics at the centre” philosophy of Deng Xiaoping to propel itself to become the 2nd largest economy in the world through meticulous use of entry into the World Trade Organisation and other institutions like IMF and G-20. With the BRI acquiring politico-diplomatic contours, a new stage has been set. Beijing avoided a head-on collision so far, but its emerging tariff wars with the US, division of the European Union, SAARC, ASEAN, African Union, South American multilateral grouping CELAC and others suggests to the emerging showdown with the established major powers.

China will also have to consider the increasing criticism at home on BRI projects. Some commentators – like Prof Sun Wenguang – have been critical of “excessive foreign aid”. Prof Xu Zhangrun of Qinghua University has been silenced recently for his article “imminent fears, imminent hopes”. Some critics dubbed the BRI projects abroad as “face projects” (mianzi gongcheng) – touching upon a sensitive cultural aspect of China’s diplomacy.

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