NEW DELHI: China may be one of the first countries to emerge from the Covid pandemic, but it promises to fundamentally change China’s biggest geo-political/geo-economic project, Belt & Road Initiative (BRI).
Two new reports point to an ongoing recalibration of the BRI, and specifically its flagship project, CPEC
Andrew Small of the
(GMF) in his study says “even before the coronavirus pandemic, CPEC had stalled. Not only are the figures commonly cited for the total package of projects under this framework since its launch in 2015—which run as high as $62 billion—no longer accurate, investments of that magnitude are not under consideration either.” He quotes a Chinese official describing the downsizing of their CPEC vision from “rocks” to “peanuts”.
Anoter detailed report by Manoj Kewalramani and Agastya Bhatia in Takshashila Institution says China has, in response to the pandemic and global geopolitics, begun to “readjust its priorities” on the BRI.
In his report, Small is careful to point out that CPEC is unlikely to prove to be a debt trap for Pakistan even if it isn’t a game-changer for Pakistan — “the two sides have so far been more cautious on debt-financing than has been seen elsewhere on the BRI.” The CPEC being China’s poster child of the BRI, its unlikely Beijing would allow it to be
Small tweeted, “Scored against the original objectives set by the Chinese and Pakistani governments, CPEC is a disappointment. It hasn’t been a “game-changer”, and it has been years since anyone on the Chinese side seriously talked about it in such transformative terms.” That doesn’t make CPEC a failure — its more modest, therefore more achievable, and more reflective of Pakistan’s economic situation than the earlier, more ambitious one, which may have been difficult to sustain
CPEC made its biggest moves between 2015 and 2018, then stalled after Imran Khan’s PTI government came in. This year, it has made a modest recovery, with China and Pakistan signing two hydropower projects at Kohala and Azad Pattan and one to upgradethe Karachi-Peshawar
highway. Pakistan will also face delays in setting up its SEZs that are also linked to presence of Chinese companies — Covid makes movement of men and materials much more difficult. This trend is reflected in Southeast Asia as well — a high speed rail project by China linking Jakarta and Bandung in Indonesia (at a cost of $6 billion) is facing similar delays. Kewalramani and Bhatia say, “Going ahead, the progress of BRI will encounter significant hurdles. Economic recovery within China and among BRI partner states is likely to be a gradual process. The pace of project resumption can be expected to stabilise by late 2021, contingent on fresh outbreaks of infections and the pace of vaccination. Consequently, Beijing is likely to remain much more discerning with its investments.” The Sino-US rivalry, which doesn’t appear to abate could also add to its near term risks, the study says.
Kewalramani predicts China could prioritise its BRI partner countries for Covid vaccines going forward. His study categorises the risks to BRI into economic and technological risks, political, security and environmental risks.
He says China too is re-adjusting its approach to BRI as a consequence. “the Chinese leadership has emphasised its focus on “high quality” BRI development.76 This has come
along with de-emphasising the significance of BRI in China’s overall development strategy of “dual circulation.” While China will continue to emphasise its “strategic” projects (like CPEC), it might refocus attention on newer aspects of BRI, like health and technology — hence the push on vaccine and 5G networks. Wang Xiaolong, director-general of Chinese foreign ministry’s International Economic Affairs Department, stated in June that Covid had “seriously affected” 20 per cent of BRI projects, another 30-40 per cent have been “somewhat affected” and about 40 per cent affected “little”. According to international Refinitive database, over 2,600 projects at a cost of $3.7 trillion are linked to BRI.