Skip to main content

Belt and Road: a double-edged sword?

Lachlan Maddock
— 1 minute read

China’s Belt and Road Initiative (BRI) could permanently alter the global economic paradigm over the next decade. But is the devil in the details?

The BRI is China’s effort to massively expand its influence in the developing world by embarking on an infrastructure project of incredible scale. If everything goes to plan, the BRI could boost global output by as much as $7.1 trillion per annum by 2040 and decrease the share of the world’s population living in extreme poverty from 5.2 per cent to 3.9 per cent. 

That’s a powerful argument for the project, which has been met with much consternation from powers whose global influence is fading. But is the BRI as altruistic as its architects claim?


Sword or debt? 

While the BRI is usually seen as a monolithic project, directed by a shadowy cabal of Beijing powerbrokers, the truth is more mundane. While Beijing has a say, the nitty-gritty is usually left to whichever agency or organisation is working on a particular project, and the country with which it is working. 

The main players in the BRI are Chinese state-owned enterprises (SOEs), in-country partner companies, and lenders – usually Chinese state-owned banks that don’t like discussing projects or loan terms. 

That opacity is what leads many to picture Machiavellian scheming and plots for world domination. In reality, the BRI is a mishmash of competing interests. It’s also wildly corrupt. In 2011, the China Communications Construction Company – a major player in the BRI – was debarred by the World Bank for engaging in fraud in the Philippines. One of its subsidiaries, China Harbour, also tried to bribe officials involved in a highway upgrade project with $100,000 stuffed into a box of tea. 

According to Aviva Global Investors, the BRI could potentially lift 8 million people from extreme poverty and 32 million from moderate poverty by 2030, primarily in Pakistan, Kenya and Tanzania. However, the projects themselves largely use Chinese companies and labour, with few opportunities for locals. Local are also sometimes materially impacted by BRI projects; in Laos, Chinese and government officials asked households to relocate without compensation to make way for a $6 billion high speed railway.

Many BRI projects also take place in countries where governance and institutions are weak, leading to problems like Djibouti’s public external debt doubling after receiving a loan equivalent to 75 per cent of GDP or China repossessing a Sri Lankan port it helped build after the country reneged on its payments. 

That’s led some to accuse China of practicing “debt trap diplomacy” – essentially, extracting diplomatic or military guarantees from countries by wiping their payments. 

Green or red? 

In a time when the environment and climate change is becoming more important in global finance, the BRI is decidedly dirty. 90 per cent of energy sector financing from Chinese SOEs and banks is in fossil fuels. 13 coal plants are planned for the China – Pakistan Economic Corridor, despite the fact that Pakistan is one of the countries most at risk from climate change in the world. 

The BRI is set to increase carbon emissions in countries along key BRI routes by 0.6 per cent, and the lack of a centralised climate framework in the BRI – companies are only required to abide by host country regulations, and many of those countries are keen to industrialise – means that few green initiatives are planned. 

Biodiversity is also threatened by BRI, with planned corridors overlapping with the habitats of at least 39 critically endangered species and 81 endangered species, including tigers and giant pandas. And while China has itself launched a number of sustainable development initiatives, aiming to become a green energy powerhouse, these aren’t being incorporated into the BRI. 

A new way forward?

Speaking at the second Belt and Road forum in 2019, President Xi Jinping vowed to correct the negative aspects of the BRI, noting that it had not created as many opportunities for participant countries as it could have.

“We need to take a people-centred approach, give priority to poverty alleviation and job creation to see that the joint pursuit of Belt and Road cooperation will deliver true benefits to the people of participating countries,” President Xi said. 

“We also need to ensure the commercial and fiscal sustainability of all projects.”

President Xi also said that the BRI would open up more of its initiatives to global investment, creating opportunities for international investors and fostering a culture of greater accountability and transparency within the occasionally opaque initiative.

But it remains to be seen whether a project as massive and decentralised as the BRI can change. And as America, Japan, and Australia establish a competing program – the Blue Dot Network – the BRI might have to kick into high gear to stay ahead of the pack. 


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 yo

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میں Please 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 daily Heavy Duty Driver: Rs. 1,700 daily Mason: Rs. 1,500 daily Helper: Rs. 850 daily Electrician: Rs. 1,700 daily Surveyor: Rs. 2,500 daily Security Guard: Rs. 1,600 daily Bulldozer operator: Rs. 2,200 daily Concrete mixer machine operator: Rs. 2,000 daily Roller operator: Rs. 2,000 daily Steel fixer: Rs. 2,200 daily Iron Shuttering fixer: Rs. 1,800 daily Account clerk: Rs. 2,200 daily Carpenter: Rs. 1,700 daily Light duty driver: Rs. 1,700 daily Labour: Rs. 900 daily Para Engine mechanic: Rs. 1,700 daily Pipe fitter: Rs. 1,700 daily Storekeeper: Rs. 1,700 daily Office boy: Rs. 1,200 daily Excavator operator: Rs. 2,200 daily Shovel operator: Rs. 2,200 daily Computer operator: Rs. 2,200 daily Security Supervisor: Rs.

A ‘European Silk Road’

publication_icon Philipp Heimberger ,  Mario Holzner and Artem Kochnev wiiw Research Report No. 430, August 2018  43 pages including 10 Tables and 17 Figures FREE 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