Skip to main content

Belt and Roadlocks

Yogesh Gupta

AUGUST 23, 2019 00:15 IST

Belt and Road Initiative

Given mounting criticism of BRI, will China incorporate best practices in the project?

China’s raging trade war with the U.S., mounting criticism of its Belt and Road Initiative (BRI), and growing schism in its Politburo on handling these issues has compelled the Chinese leadership to review the ininitiative. The BRI was conceived as a response to the vast overcapacity in infrastructure-related industries due to credit-fuelled growth in China in 2008 following the global economic recession, when its exports started dwindling. In 2009, former Deputy Director of China’s State Administration of Taxation, Xu Shanda, came up with a proposal called the Chinese Marshall Plan which suggested that China should utilise its vast foreign exchange reserves, expertise in building infrastructure, overcapacity in iron, cement, aluminium, glass, coal and shipbuilding industries and unemployed labour to meet the infrastructure demand in Southeast, Central Asia and Africa.

Announced by Chinese President Xi Jinping in September 2013, the BRI consists of a belt of rail routes, highways, oil and gas pipelines and other infrastructure projects extending from Xian in Central China through Central Asia, Russia, West Asia and Europe. There is also a branch extending from Kashgar in Xinjiang to Gwadar in Balochistan via Pakistan occupied Kashmir (PoK). The ‘road’ segment comprises a network of ports and coastal infrastructure stretching from eastern China across Southeast Asia and South Asia, the Gulf, East Africa through the Mediterranean up to Rotterdam in Europe.

According to China, more than 120 countries have signed and joined the BRI. China’s trade with these countries since 2013 has crossed more than $5 trillion and investment has totalled about $200 billion for 2,600 projects. In the first seven months of 2019, China’s trade with BRI countries was 6% higher than the growth of its global trade.

Roadblocks

However, BRI has not succeeded in the full utilisation of overcapacity in infrastructure industries. China has been forced to close many companies. About one-third of its projects are failing due to several anomalies. There is no open tendering, competitive bidding or practice of an independent pre-feasibility or environmental impact studies, as per global norms. Many projects suffer from lack of local inputs, protests on land procurement, pollution, performance delays, corruption, financial viability, unsustainable debt and low investment returns. The interest rates charged by China are high, upward of 3% on government loans and 17%-18% on commercial loans with sovereign guarantee of the local government. As many loans turn non-performing assets, China is becoming selective in giving new loans.

Some BRI projects do not make economic sense. For example, the cost of transportation by the 12,000 km-long Yiwu-London rail line will be twice more expensive than shipping. Similarly, the cost of supplying crude oil and gas from Gwadar port to Tianjin in northeastern China via the 7,000 km-long pipeline proposed by China will be $10 per barrel costlier than ocean freight. Many countries such as the Maldives, Pakistan, Sri Lanka, Bangladesh and Malaysia have asked China to restructure or downsize the BRI projects. India has rightly decided not to participate in BRI over concerns relating to sovereignty (the China-Pakistan Economic Corridor passes through PoK), lack of transparency, openness, financial sustainability, high interest and the ‘tied’ nature of these loans.

The real challenge

After a chorus of international criticism, the old swagger about BRI has faded. President Xi promised at the second Belt and Road forum in April that China would ‘finetune’ the BRI with open consultation, clean governance and green projects. The growth of BRI is down as China’s investment in these projects in the first quarter of 2019 grew only by 4% compared to 22% in 2018. The real challenge is whether best practices can be incorporated in BRI or it will remain only a ‘Chinese’ scheme given that state-owned enterprises play the lead implementing role.

Yogesh Gupta is a former Ambassador





https://www.thehindu.com/opinion/op-ed/belt-and-roadblocks/article29224389.ece

Comments

Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed.
Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area”
For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number”
Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell you …

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میںPlease help the deserving persons...Salary:Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows;Welder: Rs. 1,700 dailyHeavy Duty Driver: Rs. 1,700 dailyMason: Rs. 1,500 dailyHelper: Rs. 850 dailyElectrician: Rs. 1,700 dailySurveyor: Rs. 2,500 dailySecurity Guard: Rs. 1,600 dailyBulldozer operator: Rs. 2,200 dailyConcrete mixer machine operator: Rs. 2,000 dailyRoller operator: Rs. 2,000 dailySteel fixer: Rs. 2,200 dailyIron Shuttering fixer: Rs. 1,800 dailyAccount clerk: Rs. 2,200 dailyCarpenter: Rs. 1,700 dailyLight duty driver: Rs. 1,700 dailyLabour: Rs. 900 dailyPara Engine mechanic: Rs. 1,700 dailyPipe fitter: Rs. 1,700 dailyStorekeeper: Rs. 1,700 dailyOffice boy: Rs. 1,200 dailyExcavator operator: Rs. 2,200 dailyShovel operator: Rs. 2,200 dailyComputer operator: Rs. 2,200 dailySecurity Supervisor: Rs. 2,200 dailyCook for Chinese food: Rs. 2,000 dailyCook…

A ‘European Silk Road’

publication_iconPhilipp HeimbergerMario Holznerand Artem Kochnevwiiw Research Report No. 430, August 2018 
43 pages including 10 Tables and 17 FiguresFREE DOWNLOAD
The German version can be found here.In this study we argue for a ‘Big Push’ in infrastructure investments in greater Europe. We propose the building of a European Silk Road, which connects the industrial centres in the west with the populous, but less developed regions in the east of the continent and thereby is meant to generate more growth and employment in the short term as well as in the medium and long term.After its completion, the European Silk Road would extend overland around 11,000 kilometres on a northern route from Lisbon to Uralsk on the Russian-Kazakh border and on a southern route from Milan to Volgograd and Baku. Central parts are the route from Lyon to Moscow in the north and from Milan to Constanţa in the south. The southern route would link Central Europe with the Black Sea area and the Caspian Sea litto…