Written by: Ryan Thiele
“The ancient silk routes thrived in times of peace, but lost vigor in times of war. The pursuit of the Belt and Road Initiative requires a peaceful and stable environment.”
Those words, expressed by President Xi Jinping of the People’s Republic of China in 2017, were to be the beginning of what China believes will be a new age of peace, commerce, and security, brought about by an international Silk Road funded by trillions of dollars of Chinese investment.
The Belt and Road Initiative (BRI), which began in 2013, is a global development and investment plan by the Chinese government with the purpose of creating a more connected, global market. The investments, should they come to full fruition, will build airports, roads, rails, ports, and shipping routes across the globe, from China into Eurasia, Africa, and eventually Europe and the Americas. Though the plan seeks to develop countries with high poverty and high conflict to create stronger economic bonds across the world, there is no doubt that BRI is also a plan to develop a global trade network with Beijing as the nucleus.
On its surface the plan seems, as President Xi stated many times, a “win-win” situation. Developing countries will receive enormous loans to build infrastructure and put themselves on the global commercial map. Global trade routes would run through their ports causing industry to develop, thereby plugging their economies into international supply chains. On the other hand, China receives interest on loans to dozens of countries and new markets for Chinese goods.
There are catches however. First, usually BRI projects are built by Chinese manufacturing companies and raw materials. Many perceive this as a way to keep Chinese companies working as reports show the country’s economy is slowing down.This corresponds with a fear that global trade will continue declining and that the BRI projects, no matter China’s intentions, will not bring the capital that was advertised into developing countries.
Secondly, the projects are financed with loans that are accompanied by large interest rates. The best example of the loans’ impact is Sri Lanka’s Hambantota port and international airport. The project was a red flag from the start: it was financed by higher-than-normal interest rates, built by Chinese companies and materials, and was backed by a former Sri Lankan president who received political support and money from China. The project sat idle, Sri Lanka was heavily indebted, and eventually the country was forced to sell almost its entire stake into the port and give a 99-year lease on 15,000 acres of surrounding land to the Chinese in exchange for forgiveness on their debt.
Sri Lanka isn’t alone. Thailand renegotiated a deal with the Chinese that would have China supply technology and oversee procurement, outside of financing, but maintain Thai control over actual construction. Zimbabwe was able to get some of its debt forgiven after some BRI projects, though the country still owes a billion dollars. It is also important to note the situation in Venezuela, where over $50 billion from China was invested into a country that has an economy with near total commercial collapse. Venezuela has been allowed to defer payments and pay in the form of oil exports, much to the displeasure of Chinese accountants who do not want to write off Venezuela as a lost investment.
Eurasia, South East Asia and Africa, regions with the most emerging markets, are prime targets for BRI projects. A large railway was built between Kenya’s two largest cities, and a highway has been built between Ethiopia and Djibouti on the East African coast. Another BRI project is underway to build roads across Malaysia. Yet as projects are underway across Asia and Africa, China is looking long term into Europe. With the European Union unable to develop a cohesive policy towards China, China is exploiting the confusion on the continent to bring some European countries into its sphere of influence. The Balkans, notably Serbia and Bosnia and Herzegovina, are seeing a growing influx of Chinese investment and BRI projects, as well as political support to leaders like Bosnian President Milorad Dodik, an avid ethno-nationalist. Lastly, Italy became the first major Western country to sign on to the Belt and Road with the hopes of boosting their sluggish economy.
With trade wars erupting and international commerce declining, free trade is slowly leaving the political table. China’s economic development and infrastructure plan looks like the band-aid that could quell global issues and bring about peace and prosperity, but it is hard to envision these ideals when their definition is being defined by a juggernaut seeking to expand its markets and influence.