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Why China’s BRI has run into roadblocks

China’s rising influence through the BRI has already attracted backlash in countries such as Pakistan, Sri Lanka, and Malaysia

Last Published: Fri, Dec 28 2018. 12 47 AM IST

Arjun Srinivas

Fears of a debt-trap because of BRI projects have prompted a backlash in several countries. Photo: Reuters

New Delhi: When China initiated its ambitious ‘Belt and Road Initiative’ (BRI) to boost infrastructure and connectivity globally, India was one of the few countries that refused to take part in it. However, over the past few months, concerns regarding BRI have been mounting across Asia.

A new research paper by Kishan S. Rana, emeritus fellow, Institute of Chinese Studies in Delhi, published in the Economic and Political Weekly, explains why. The study describes how state sanctioned loans to partner countries have terms and conditions that make them problematic. For instance, a bulk of the $60 million that has been lent to Pakistan, is commercial, rather than concessional, and is due to be repaid in dollar terms. This could potentially result in a gradual devaluation of the currency against the dollar. As the majority of the loans come from Chinese institutions that are basically state entities, China gains immense leverage over the recipient countries.

Another issue is with regard to inflated costs, because of the absence of competitive bidding for the projects. In addition, China’s policy to send its own personnel, engineers and skilled labour has led to bitterness among the local populations, who do not benefit from employment or technical know-how.

China’s rising influence through the BRI has already attracted backlash in countries such as Pakistan, Sri Lanka, and Malaysia. The new Malaysian government has scrapped $23 billion worth BRI projects in the country. Japan has also expressed reservations over BRI.

The author compares China’s big-ticket infrastructure investments to Soviet era investments in India, China and Eastern Europe, which created a captive market for Soviet capital goods. Among the countries it is investing in, China appears to be creating a dependence on Chinese products and services. This represents the more significant threat of the BRI.


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