Wednesday, January 24, 2018

Chinese contractors grab lion’s share of Silk Road projects

Chinese contractors grab lion’s share of Silk Road projects
Beijing fails to share benefits of transport infrastructure programmes

China’s pledge to the world is that it will create a “community with a shared future for mankind”. But that sharing is no more than an afterthought as it rolls out an ambitious programme to build transport infrastructure across Eurasia, a study shows. Of the contractors working on China-funded transport infrastructure projects in 34 Asian and European countries, 89 per cent were Chinese, leaving 11 per cent from elsewhere, according to the study by the Center for Strategic and International Studies, a Washington-based think-tank. The discrepancy challenges the rhetoric that Beijing has used to promote its “Belt and Road Initiative” (BRI), a signature policy of Xi Jinping, China’s leader, which seeks to build infrastructure to win friends in some 70 countries. In his speech to the 19th party congress late last year, Mr Xi promised that China’s engagement with the world would be open and inclusive to create a “shared community”. In his keynote speech, Mr Xi said: “We should stick together through thick and thin, promote trade and investment liberalisation and facilitation and make economic globalisation more open, inclusive and balanced so that its benefits are shared by all.” But the CSIS study shows the gulf between rhetoric and reality, said Jonathan Hillman, director of the Reconnecting Asia Project at CSIS. “Despite official rhetoric about the Belt and Road being open, it is first and foremost a China-centric effort,” Mr Hillman said. “It is in everyone’s interest, including China’s, that projects are open to fair competition. Unless there are more concrete opportunities to participate in the BRI, more countries will start to ask why they joined the BRI and those that have not joined will not.

In contrast to the overwhelming preference shown to Chinese contractors in China-funded projects, data for projects in Eurasia funded by two western multilateral development banks (MDBs) — the World Bank and the Asian Development Bank — shows a more even distribution of awards. Among MDB-funded transport infrastructure projects, 41 per cent of contractors were from countries in which the infrastructure was being built, while 29 per cent were Chinese and 30 per cent were from third countries, according to the CSIS study, which covered 178 projects between 2006 and now. The central importance of BRI — also known as the New Silk Road — to Beijing was highlighted during Mr Xi’s speech to the congress, when he stressed its role forging a new type of international development distinct from the western-led world order. Raffaello Pantucci, director of the UK’s Royal United Services Institute, said hopes that China will open up its contract awards in the BRI to foreign contractors were based on a misreading of Beijing. “When we hear the BRI rhetoric we think it is about China sharing the love and giving us money and contracts, but they would say they are sharing the love by helping fill the infrastructure deficit and helping under-developed countries develop,” Mr Pantucci said

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