Beijing, China, October 18: China is celebrating 10 years of President Xi Jinping’s signature Belt and Road Initiative (BRI) on October 17-18 in the Chinese capital Beijing. A decade has passed since the launch of BRI, a global infrastructure and investment program envisioned as a means to fund much-needed infrastructure development and connectivity.
The BRI remains a significant player in the global landscape, with over 140 countries and international organizations joining or signing its agreements.
As the Third Belt and Road Initiative Forum unfolds, we explore the sweeping narrative of the BRI, encompassing its origins, the financial strains on participating nations, the consequences of ambitious projects, and the geopolitical implications it carries.
Origins and Early Enthusiasm:
In 2013, China unveiled its grand vision, the Belt and Road Initiative (BRI), an ambitious plan aimed at global infrastructure development and connectivity.
The BRI’s origins can be traced to China’s history of providing economic aid and technical assistance to other nations. It gained momentum in the wake of the 2008 global financial crisis, as Chinese companies, both state-owned enterprises (SOEs) and private firms, sought to address overcapacity issues.
By the end of 2015, the BRI had successfully initiated 3,987 new foreign contracted projects in participating countries, marking a significant acceleration of overseas projects compared to previous years.
The BRI was conceived as a multifaceted initiative aimed at fostering infrastructure development, trade, finance, and people-to-people connectivity.
In 2017 and 2018, the Chinese government reduced regulatory requirements, which saw a surge in the number of new foreign contracted projects, peaking at 8,158 at the end of 2016.
As the BRI matured, there was a notable shift in the preferences of Chinese companies. The number of new foreign contracted projects saw a decline, while non-financial direct investments in BRI countries by Chinese companies continued to rise.
Between 2015 and 2022, non-financial direct investment from Chinese companies into BRI countries exhibited a steady and substantial increase, underlining a change in engagement patterns.
Challenges and Failures:
Reports began emerging about construction flaws, project cancellations due to concerns over corruption and debt, and projects left incomplete. These issues were indicative of malicious lending along with the result of overeager engagement from both Chinese companies and BRI partner countries.
Financial Strain and Hidden Debt:
While the BRI was initially hailed as a means of providing infrastructure and connectivity, it imposed a substantial financial burden on participating nations.
Unlike Western lenders that offer direct aid or subsidized loans, China extended $1 trillion in loans at commercial rates. Furthermore, as much as half of BRI loans are suspected to be off the books, hidden from official statistics.
Debt Distress and Bankruptcy:
The consequences of these loans are evident, with nations like Zambia and Sri Lanka being pushed into bankruptcy and default.
Several countries, including Argentina, Ethiopia, Kenya, Malaysia, Montenegro, Pakistan, and Tanzania, now grapple with extreme debt-to-GDP ratios that force difficult decisions to service their debt.
Growth of Public Debt:
The BRI has been a driving force behind the tripling of public debt in sub-Saharan Africa since 2010, with Chinese lending playing a significant role. Worryingly, 60% of BRI countries now face debt distress, marking a 1,200% increase since 2010.
Chinese Financial Burden:
China, too, bears a financial burden, with the need to fund $240 billion in bailouts in recent years. However, these bailouts do not forgive the debt but extend it, emphasizing China’s commitment to ensuring it gets repaid.
Infrastructure Failures and Corruption:
The heavy debt burden is exacerbated by reports of failing and wasteful infrastructure. In Ecuador, a $2.6 billion hydroelectric dam suffers from thousands of cracks, while dams in Uganda and Pakistan exhibit structural issues.
Sri Lanka boasts an underused international airport, while Zambia’s Mongu-Kalabo highway sees minimal traffic.
Corruption and Scandals:
Chinese state-owned businesses have been implicated in bribery scandals, with millions paid to political leaders in the Democratic Republic of the Congo, Ecuador, and Malaysia.
Geopolitical Implications:
The BRI touted as a “win-win” cooperation, has raised concerns due to its utility for Beijing in pushing countries to isolate Taiwan and introduce anti-democratic measures, surveillance, and intelligence-gathering in recipient countries. It has also been linked to military pressure in the South China Sea.
Global Democracy Challenges:
Beyond financial and infrastructure issues, the BRI has been associated with attempts to undermine democracy, attacks on human rights and freedoms, propaganda and misinformation campaigns, and press intimidation in foreign countries. It has contributed to the distortion of multilateral institutions and interference in foreign democracies.
As the BRI celebrates its 10th anniversary, the world watches closely. While China may continue to extol the virtues of “win-win” cooperation, there are growing questions about the true nature of its intentions and the substantive success of this grand initiative. The BRI has brought significant financial burdens and geopolitical complexities, and recipient countries must carefully assess the implications of engaging with China. The legacy of the BRI remains one of ambition, controversy, and failure.
