Skip to main content

Sieren's China: New Silk Road hangs in the balance


14.05.2020

The coronavirus pandemic has meant delays and higher costs for the Belt and Road Initiative, but has also presented new possibilities. Beijing needs to find a balance between stability and expansion, says Frank Sieren.

https://www.google.com/amp/s/amp.dw.com/en/sierens-china-new-silk-road-hangs-in-the-balance/a-53431109

The coronavirus pandemic has slammed the brakes on China's Belt and Road Initiative (BRI). Otherwise known as "The New Silk Road," the project was presented by Chinese President Xi Jinping in 2013. It is a global infrastructure network of roads, railways, air and seaports designed to connect business between Asia, Europe and Africa.

Yet, the coronavirus crisis has not only significantly slowed Western economies, now building sites along the BRI are at a standstill, too. Materials cannot be delivered due to disruptions in supply chains, and thousands of Chinese workers are unable to travel to and from countries where projects are currently underway. As a result, many contract obligations cannot be fulfilled. Some will have to be renegotiated, and others will have to be cancelled due to lack of financing.

How much help for partners?

That last point is especially true for countries that simply do not have enough liquidity to survive the current global crisis, which presents Beijing with a dilemma — it cannot simply abandon partners on the one hand, but it cannot carry their debt forever, either – China is having a hard enough time getting its own economy up and running again.

Last month, for instance, Islamabad asked China to accommodate them regarding Pakistan's loan repayments on shared projects. Pakistan is in dire financial straits and the China-Pakistan Economic Corridor (CPEC), valued at around $62 billion (€58 billion), is one of the BRI's key projects. Several African states have also come knocking on Beijing's door, asking for extensions or reductions on repayments.

DW columnist Frank Sieren

Read moreChina's ambitious bid for southeast Asia hegemony

Out of respect for Chinese sensitivity, most countries have refrained from mentioning the coronavirus pandemic originated in China, preferring instead to say they found themselves in this difficult financial situation through no fault of their own. Countries have also reminded the Chinese that the "One Belt, One Road" initiative was entered into the country's constitution in 2017 as a national objective. That was and remains a seal of quality guaranteeing Beijing's reliability and commitment to partner countries.

Beijing must also be careful to ensure that warnings raised by the West calling the project a Chinese debt trap in the guise of assistance, do not become a reality.

Infografik China's new Silk Road EN

Compromise, but no substantive changes

The Hambantota Port project in Sri Lanka, for instance, serves as a glaring example of just how that scenario can play out. In 2017, Sri Lanka announced it could no longer service its debt to China, at which point Beijing accepted a debt-for-equity swap, agreeing to lease the strategically important Indian Ocean hub for the next 99 years. Although such incidents have not been repeated, the damage to the BRI's image was enormous.

That is why Beijing signaled a willingness to compromise last year when Malaysia's Prime Minister Mahathir Mohamad stopped construction on a new rail line in order to renegotiate the terms of the agreement. Ultimately, Malaysia ended up paying $11 billion less than previously scheduled and is already thinking about new projects with the Chinese.

01:19 mins.
BUSINESS | 25.07.2019

Malaysia secures cost cut for China-built rail project

China is also working hard to send clear signals of strength despite the coronavirus pandemic. In mid-March, President Xi announced there would be no "fundamental changes" to the BRI. In fact, Beijing has signed a number of new agreements with countries – such as Myanmar, Nigeria and Turkey – since the beginning of this year. And in late April, Chinese state news agency Xinhua announced that an important section of the 411-kilometer-long (255 mile) high-speed rail line between China's Yunnan Province and Laos had just been completed.

Construction of the Jakarta-Bandung high-speed rail line in Indonesia, on the other hand, has been at a complete standstill due to quarantine measures. Things are similar in Pakistan, Sri Lanka and Bangladesh. Still, it is highly unlikely that the BRI will be suspended or fail, there is simply too much at stake for Beij

Balance between expansion and stability

Political help counts double in times of crisis, Xi knows that and, as difficult as times may be now, he will likely have a better bargaining position than the West. After all, China got over the coronavirus pandemic before anyone else and is already in a phase of economic recovery.

China's state banks, which have extended most foreign loans over the past 15 years, have enough cash on hand to decided whether to grant loan extensions, lower interest rates or even forgive loans on a case-by-case basis. Xi's biggest problem: Chinese citizens need help, too, and they will have little understanding for cash flowing to Pakistan or Nigeria. Despite Chinese censorship, anger over such developments can quickly boil over on social media.

Nerves are raw in China after the shock of the coronavirus crisis. Now President Xi's biggest challenge will be to find the right balance between foreign expansion and domestic stability

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 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