By Prof. (Dr.) Gulshan Sachdeva
This year marks a decade since China’s ambitious infrastructure funding project, the Belt and Road Initiative (BRI), was first outlined by President Xi Jinping. Spanning countries from Africa to Asia and seeing investments of hundreds of billions of dollars, it has also come under criticism over the years about how sustainable these debts may be. Why did China launch the project in 2013, and how does it stand at present? How has India responded to it?
Prof. Gulshan Sachdeva explains key aspects of the project and where it stands now after a decade since its inception :
What was the idea behind the BRI, and how did these goals evolve over the years?
President Xi Jinping announced the Silk Road Economic ‘Belt’ during his visits to Kazakhstan in 2013. The ‘Belt’ plan was to revitalise a series of trading and infrastructure routes between Asia and Europe. Connectivity through Central Asia was a key element of the initiative.
Subsequently, President Xi announced a sea trade infrastructure called ‘Road’. This maritime ‘Road’ would connect China with Southeast Asia, Europe and Africa. The major focus has been to build ports, bridges, industry corridors and other infrastructure throughout South East Asia and the Indian Ocean.
For some time, together these initiatives were referred to as the One Belt One Road Initiative (OBOR). Since 2015, it has been mostly referred to as the BRI.
Initially, the BRI was based on five principles: (1) policy coordination (2) infrastructure connectivity (3) trade (4) financial integration and (5) people-to-people connections. Later, the sixth principle of ‘Industrial cooperation’ was also added.
Basically through the BRI, China wanted to resolve two major concerns, viz capital surplus and industrial overcapacity. It was also about increasing Chinese political influence in broader regions.
Between 2013 and 2018, the World Bank estimated that investment in BRI projects including energy projects was about $575 billion. Earlier, the Organisation for Economic Co-operation and Development (OECD) also estimated that the BRI investment projects were likely to add $1 trillion in funding between 2017 and 2027.
China has hosted three BRI Forums in the years 2017, 2019, and 2023. These gatherings attracted significant participation from world leaders, leading to the signing of numerous agreements during each of these forums.
At the tenth anniversary of the initiative, the Chinese government declared that more than 150 countries and 30 international organisations have embraced the BRI. It was also reported that 3,000 BRI projects valued at $1 trillion, are currently underway across the globe.
Originally, the initiative proposed six international Economic Corridors (EC): the New Eurasia Land Bridge; China-Central Asia-West Asia-EC; China-Mongolia-Russia-EC, China-Indochina Peninsula-EC, the China-Pakistan-EC (CPEC); and the Bangladesh-China-India-Myanmar (BCIM)-EC. At the second BRI Forum in 2019, a list of 35 major corridors/projects was released. As large number of BRI projects are being carried out in nearly all parts of the world, they are affecting all major economies even if they are not participating in the initiative.
Some countries in Africa have praised the project, whereas the likes of India and the United States have accused China of engaging in ‘debt trap diplomacy’ – aiming to own countries’ assets if they are unable to repay the loans. Today, what is its status?
Building infrastructure is never risk-free. Any large initiative like the BRI having thousands of infrastructure projects will have many failures as well as success stories. India was the first to point out issues concerning debt trap, lack of transparency and sustainability of BRI projects.
Later, the US and the EU also raised similar concerns. But there continues to be a huge infrastructure deficit in the Global South. So despite the criticism, BRI is still an attractive proposition to many developing countries in Asia, Africa and Latin America. Strong Chinese strategic financial support has played a crucial role.
Economic conditions today are much more difficult than a decade ago. The Chinese have realised some weaknesses. They have already started talking about open, green and clean corridors and linking these projects with Sustainable Developments Goals. But if they follow these rules, some of the projects may not be feasible for funding.
At the latest BRI forum held in Beijing earlier this month, a reduced number of heads of state was noticed compared to previous meetings. Can it be said that there has been a cooling off regarding some of the initial enthusiasm?
All participants in the BRI projects have learned in the last ten years.
Because of geopolitical tensions, the United States has sharpened its criticism of the BRI. In the beginning European policy makers looked at the BRI in a positive manner.
The EU itself has been promoting regional integration initiatives throughout the world for decades. The EU and China, in fact, established a connectivity platform in 2015. A large number of European leaders participated in the first two BRI Forums.
Of late, however, there has been growing scepticism and apprehensions about Beijing’s intentions and the way many of the projects are being implemented. These evolving perceptions also mirror the EU's reassessment of its relationship with China. Italy’s recent apprehensions of the project and its possible departure from the BRI will be a symbolic setback as it was the only G7 country which had formally joined the initiative.
What has progress been like on the China-Pakistan Economic Corridor (CPEC) front?
The CPEC has been a flagship BRI project from the beginning. Pakistan is going through a very difficult political and economic phase. But despite some analysts indicating that CPEC projects may create long term problems for the economy, Pakistan is unlikely to abandon the CPEC.
The $60 billion CPEC is now central to China-Pakistan “all weather” strategic partnership and bilateral free trade agreement. A large part of the CPEC is energy related projects. The rest of the projects are in the road and railway infrastructure and Gwadar port.
There has been some progress: the Sukkur-Multan section of Peshawar-Karachi Motorway, the Havelian-Thakot section of the Karakoram Highway Phase II and the Lahore Orange Line Metro are operational. Many energy projects including coal-fired plants at Sahiwal, Port Qasim and Hub are also operational. Now, a few CPEC projects are also likely to be extended to Afghanistan.
What have India’s views been on the BRI?
India's position on the BRI has remained relatively consistent since 2013. From the beginning, India had reservations about the BRI – mainly due to sovereignty related issues, as the CPEC goes through the Pakistan-occupied Kashmir (PoK), and geopolitical implication of projects in the Indian Ocean.
The importance of the Indian Ocean for China has increased significantly due to its expanding trade, energy transport and investments. It started expanding its footprints in India’s neighbourhood through investments in various ports in Bangladesh, Pakistan, Sri Lanka and Myanmar. As commercial ports could be easily converted into military use, these developments have troubled Indian policy makers and analysts.
China's economic presence in India’s neighbourhood, including in South Asia, has already undergone substantial expansion. Moreover, many negative developments in broader India-China ties (trade deficit, border tensions, etc.) have also affected India’s perceptions about the BRI.
While India has refrained from endorsing the BRI and has not taken part in any BRI Forums, it has been an active participant in the China-headquartered Asian Infrastructure Investment Bank (AIIB) since its inception. The Silk Road Fund (SRF) and the AIIB are the two main channels for BRI investment and financing. With about $10 billion in borrowing, which is about 20 per cent of AIIB’s total lending, India has emerged as a top market for the agency.
Many in the West have flagged the slowdown in the Chinese economy in recent years. Could this impact BRI projects?
For a long time, the world was used to the narrative of the rise and rise of China. In 2019, the Chinese economy was 42 times larger than what it was in 1980. In the last fifteen years, China was also a major contributor to global growth.
As the economy matured, “going out” through the BRI was expected to provide another push for growth. Some slowdown in growth was already factored into the BRI strategy.
However, current geopolitical tensions resulting in “decoupling’ or ‘de-risking’ measures by the US, Europe, and many others to reduce their own economic dependence on China might adversely affect the Chinese economy as well as BRI expansion. In the wake of these developments, China will have to re-strategize some of the BRI projects.
How do these domestic worries impact the standing of Xi Jinping, who is now in his third term as the head of the Chinese state and the Communist Party?
Undoubtedly, the BRI stands as President Xi's most ambitious foreign policy endeavour. In 2017, he dubbed it the "project of the century" and it is a part of his long-term dream of a China-dominated world.
Despite facing criticism, the BRI has already cultivated substantial diplomatic and geopolitical leverage for China within the Global South. The West is still scrambling to provide an alternative to the BRI in terms of infrastructure investments.
Faced with a challenging geopolitical and economic landscape, China is now adjusting its ambitions, aiming to pivot towards green and smaller-scale development projects. Indeed, the success of other ambitious China-led diplomatic and economic plans, like the Global Security Initiative and the Global Development Initiative, hinges largely on the BRI's success.
Originally Published : The Indian Express, 30th October' 2023
Posted on SIS Blog with the Authorisation of the Author
Prof. (Dr.) Gulshan Sachdeva is a Professor, at the Centre for European Studies and Coordinator, at the Jean Monnet Centre of Excellence, at Jawaharlal Nehru University, New Delhi, India.