BRI: An Overview

Recently, the Third and Road Forum for International Co-operation being convened in China.

What is Belt and Road Initiative (BRI)?

• The BRI is an ambitious plan to develop two new trade routes connecting China with the rest of the world. But the initiative is about far more than infrastructure.
• Often termed as China’s Marshall Plan, it is an effort to develop an expanded, interdependent market for China, grow China’s economic and political power, and create the right conditions for China to build a high technology economy.
  
  

Why create the Belt and Road?

• There are three main motivations for the BRI:
• The first, and most discussed internationally, is China’s rivalry with the US. The vast majority of Chinese international trade passes by sea through the Malacca strait off the coast of Singapore which is a major US ally.

• China’s intention is also to make participating nations interdependent with the Chinese economy, and thereby build economic and political influence for China.

• The second key reason for the initiative is the legacy of the 2008 financial crisis. China’s government responded to the emergency with a stimulus package, issuing contracts to build railways, bridges, and airports, but saturated the Chinese market in the process. The Belt and Road framework provides an alternative market for China’s vast state-owned companies beyond the borders of China.
• Finally, the Belt and Road is seen as a crucial element in the Chinese government’s efforts to stimulate economies of the country’s central provinces, which historically lag behind richer coastal areas. The government uses the Belt and Road to encourage and support businesses in these central regions, allocating budget generously, and encouraging businesses to compete for Belt and Road contracts.

Why is it called the ‘Belt and Road’ initiative?

• The Belt and Road Initiative is a relatively new name. Initially it was referred to as two separate projects, then as the ‘One Belt, One Road’ initiative, then finally as the Belt and Road Initiative.

• The Belt:
  • The Silk Road Economic ‘Belt’ element refers to plans for a revitalized series of ancient overland trading routes connecting Europe and Asia to be built largely with Chinese expertise.
  • The idea was first proposed by Chinese president Xi Jinping during a visit to Kazakhstan in 2013, and central Asia is seen as the most vital region for the ‘Belt’ element.
• The Road:
  • In 2014 Xi Jinping outlined plans to additionally establish new sea trade infrastructure along the old Marco Polo route – a maritime silk road connecting China, Southeast Asia, Africa, and Europe.
  • This would be a longer route avoiding the Malacca Strait, incorporating fuelling stations, ports, bridges, industry, and infrastructure through Southeast Asia and into the Indian Ocean.
  • Pakistan is seen as perhaps the most crucial partner country in this effort through the China Pakistan Economic Corridor project.

Who is funding the Belt and Road Initiative?

• The Chinese state is the underwriter for the initiative, via its four state-owned banks lending to state owned enterprises. Other governments have criticized the Belt and Road for the lack of private sector participation.

• There is, though, a little enthusiasm for the initiative from even the Chinese private sector due to the lack of return on investment.

Challenges related to BRI:

• Debt-Trap Challenge-
• One of the most significant criticisms of the BRI is that it is a debt trap, which involves China lending money to developing countries for infrastructure projects that they cannot afford to repay.
• Critics argue that this leads to countries becoming trapped in a cycle of debt and dependence on China, which can undermine their sovereignty and increase their vulnerability to economic and political pressure from China.

Examples of countries that have experienced debt issues as a result of BRI projects:

• Sri Lanka, for example, was unable to repay its debt for the Hambantota Port project and was forced to hand over control of the port to China on a 99-year lease.
• Djibouti's struggle to repay Chinese loans has also generated criticism on the Chinese model of project financing for creating debt traps for developing countries.
• Pakistan's debt to China has also been growing, with concerns raised about the financial sustainability of the projects and their impact on Pakistan's economy with China investing billions of dollars in infrastructure projects under the China-Pakistan Economic Corridor (CPEC), a key component of the BRI.
• China has invested heavily in infrastructure projects in Laos, however, the project has been criticised for its high cost and potential impact on the environment, and concerns have been raised about Laos' ability to repay the loans from China. These are just a few of many such cases.
•  Political Issues:
  • Geopolitical rivalries and disputes, such as theIndia-China border dispute, have affected the implementation of BRI projects in certain regions.
  • These political tensions can undermine the initiative's progress.
• Environmental and Social Challenges:
  • Infrastructure development projects under the BRI have faced criticism for their potential environmental and social impacts. Ensuring that BRI projects are environmentally sustainable and consider the well-being of local communities is a challenge.
• Geostrategic Concerns:
  • The BRI has raised geopolitical concerns, particularly regarding China's growing influence and control over critical infrastructure in partner countries. These concerns have led some countries to reevaluate their participation in the initiative.

India’s Concerns wrt BRI:

• India is of the opinion that the inclusion of the so-called CPEC which passes through parts of the Indian state of Jammu & Kashmir under illegal occupation of Pakistanas a flagship project of BRI, reflects lack of appreciation of India’s concerns on the issue of sovereignty and territorial integrity.
• The Indian Government firmly believes that connectivity initiatives must be based on the universally recognized international norms, good governance, rule of law, openness, transparency, and equality, and must be pursued in a manner that respects sovereignty and territorial integrity.

Outcomes of the BRI Forum for International Co-operation:

• The Chinese President brushed aside criticisms and reiterated his commitment to the initiative.
• Xi also proposed an eight-part action plan on the Belt and Road initiative, including the full removal of restrictions on foreign investment in Chinese manufacturing and an initiative on global artificial intelligence governance.
• BRI was spoken of being the engine that will fuel the growth of third world countries in the coming years.