Belt and Road Initiative (BRI)
Context: Recently, the US president Joe Biden has criticised the China’s Belt and Road Initiative (BRI) BRI (Belt & Road Initiative) in G-7 meeting.
Background
- China’s Belt and Road Initiative (formerly known as One Road One Belt Initiative), sometimes referred to as the New Silk Road, is one of the most ambitious infrastructure projects ever conceived.
- With BRI, China wants to connect Asia with Africa and Europe via land and maritime networks with the aim of improving regional integration, increasing trade, and stimulating economic growth.
- The name was coined in 2013 by China’s President Xi Jinping, who drew inspiration from the concept of the Silk Road established during the Han Dynasty 2,000 years ago – an ancient network of trade routes that connected China to the Mediterranean via Eurasia for centuries. The BRI has also been referred to in the past as ‘One Belt One Road.
- President Xi’s vision is an ambitious program of infrastructure building to connect China’s less-developed border regions with neighbouring countries. OBOR is arguably one of the largest development plans in modern history.
- On land, Beijing aims to connect the country’s underdeveloped hinterland to Europe through Central Asia. This route has been dubbed the Silk Road Economic Belt.
- Whereas the second leg of BRI wants to build a 21st Century Maritime Silk Road connecting the fast-growing Southeast Asian region to China’s southern provinces through ports and railways.
- Xi has launched OBOR at a time when Chinese foreign policy has become more assertive. This has meant that OBOR is often interpreted as a geopolitical plan rather than a purely economic one.
Belt and Road Initiative (BRI)
What was the original Silk Road?
- The original Silk Road arose during the westward expansion of China’s Han Dynasty (206 BCE–220 CE), which forged trade networks throughout what are today know as Central Asian countries of Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, as well as modern-day India and Pakistan to the south. Those routes extended more than four thousand miles to Europe.
- Central Asia was thus the epicentre of one of the first waves of globalization, connecting eastern and western markets, spurring immense wealth, and intermixing cultural and religious traditions. Valuable Chinese silk, spices, jade, and other goods moved west while China received gold and other precious metals, ivory, and glass products. Use of the route peaked during the first millennium, under the leadership of first the Roman and then Byzantine Empires, and the Tang Dynasty (618–907 CE) in China.
- But the Crusades, as well as advances by the Mongols in Central Asia, dampened trade, and today Central Asian countries are economically isolated from each other, with intra-regional trade making up just 6.2 percent of all cross-border commerce. They are also heavily dependent on Russia, particularly for remittances—they make up one-third of the gross domestic product (GDP) of Kyrgyzstan and Tajikistan. By 2018, remittances had dipped from their 2013 highs due to Russia’s economic woes.
Abdul Rehman Makki //ग्लोबल टेररिस्ट घोषित
Belt and Road Initiative (BRI)
What are China’s plans for its New Silk Road?
- President Xi announced the initiative during official visits to Kazakhstan and Indonesia in 2013. The plan was two-pronged: the overland Silk Road Economic Belt and the Maritime Silk Road. The two were collectively referred to first as the One Belt, One Road initiative but eventually became the Belt and Road Initiative.
- It included creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward—through the mountainous former Soviet republics—and southward, to Pakistan, India, and the rest of Southeast Asia. Such a network would expand the international use of Chinese currency, the renminbi, and “break the bottleneck in Asian connectivity,”. In addition to physical infrastructure, China plans to build fifty special economic zones, modelled after the Shenzhen Special Economic Zone, which China launched in 1980 during its economic reforms under leader Deng Xiaoping.
- Xi Jinping subsequently announced plans for the 21st Century Maritime Silk Road at the 2013 summit of the Association of Southeast Asian Nations (ASEAN) in Indonesia. To accommodate expanding maritime trade traffic, China would invest in port development along the Indian Ocean, from Southeast Asia all the way to East Africa and parts of Europe.
- China’s overall ambition for the BRI is staggering. To date, more than sixty countries—accounting for two-thirds of the world’s population—have signed on to projects or indicated an interest in doing so. Analysts estimate the largest so far to be the estimated $62 billion China-Pakistan Economic Corridor, a collection of projects connecting China to Pakistan’s Gwadar Port on the Arabian Sea. In total, China has already spent an estimated $200 billion on such efforts. Morgan Stanley has predicted China’s overall expenses over the life of the BRI could reach $1.2–1.3 trillion by 2027, though estimates on total investments vary.
Belt and Road Initiative (BRI)
What does China want to achieve through BRI?
- China has both geopolitical and economic motivations behind the initiative. Xi has promoted a vision of a more assertive China, while slowing growth and rocky trade relations with the United States have pressured the country’s leadership to open new markets for its goods.
- Experts see the BRI as one of the main planks of a bolder Chinese statecraft under Xi, alongside the Made in China 2025 economic development strategy. For Xi, the BRI serves as pushback against the much-touted U.S. “pivot to Asia,” as well as a way for China to develop new investment opportunities, cultivate export markets, and boost Chinese incomes and domestic consumption. “Under Xi, China now actively seeks to shape international norms and institutions and forcefully asserts its presence on the global stage.”
- At the same time, China is motivated to boost global economic links to its western regions, which historically have been neglected. Promoting economic development in the western province of Xinjiang, where separatist violence has been on the upswing, is a major priority, as is securing long-term energy supplies from Central Asia and the Middle East, especially via routes the U.S. military cannot disrupt.
- More broadly, Chinese leaders are determined to restructure the economy to avoid the so-called middle-income trap. In this scenario, which has plagued close to 90 percent of middle-income countries since 1960, wages go up and quality of life improves as low-skilled manufacturing rises, but countries struggle to then shift to producing higher-value goods and services.
Belt and Road Initiative (BRI)
What are the potential roadblocks?
- The Belt and Road Initiative has some critical opposition. For some countries that take on large amounts of debt to fund infrastructure upgrades, BRI money is seen as a potential poisoned chalice. BRI projects are built using low-interest loans as opposed to aid grants. Some BRI investments have involved opaque bidding processes and required the use of Chinese firms. As a result, contractors have inflated costs, leading to cancelled projects and political backlash.
- In Malaysia, Mahathir bin Mohamad, elected prime minister in 2018, campaigned against overpriced BRI initiatives, which he claimed were partially redirected to funds controlled by his predecessor. During his term he cancelled $22 billion worth of BRI projects, although he later announced his “full support” for the initiative in 2019. In Kazakhstan, mass protests against the construction of Chinese factories swept the country in 2019, driven by concerns about costs as well as anger over the Chinese government’s treatment of Uighurs in Xinjiang Province.
- More such stories are likely, according to a 2018 report by the Center for Global Development, which notes that eight BRI countries are vulnerable to debt crises. CFR’s Belt and Road Tracker shows overall debt to China has soared since 2013, surpassing 20% of GDP in some countries.
- Some governments such as in Kenya and Zambia, are carefully studying BRI investments before they sign up, and candidates in Malaysia have run—and won—campaigns on anti-BRI platforms. Chinese leaders were reportedly surprised by such pushback, and BRI investment began to slow in late 2018. Yet by the end of 2019, BRI contracts again saw a significant uptick.
Belt and Road Initiative (BRI)
How has the United States responded to China-led regional integration?
- The United States has shared other countries’ concerns about China’s intentions. Developing the economies of South and Central Asia is a long-standing U.S. goal that intensified after the start of the U.S.-led war in Afghanistan and President Barack Obama’s pivot to Asia.
- The Obama administration frequently referenced the need for the Afghan economy to move past foreign assistance, and in 2014 then-Deputy Secretary of State William Burns committed the United States to returning Central and South Asia “to its historic role as a vital hub of global commerce, ideas, and culture.”
- The Obama administration supported a $10 billion gas pipeline through Turkmenistan, Afghanistan, Pakistan, and India (TAPI). It also spent billions of dollars on roads and energy projects in Afghanistan and used its diplomatic muscle to help craft new regional cooperation frameworks to foster Central Asian economic links.
- United States might find a silver lining in the BRI. The United States could use BRI projects as a way to have China pay for infrastructure initiatives in Central Asia that are also in the U.S. interest.
India-Norway Relations//चर्चा में क्यों
Belt and Road Initiative (BRI)
What is the role for third countries?
- Other countries have sought to balance their concerns about China’s ambitions against the BRI’s potential benefits.
- India- India has tried to convince countries that the BRI is a plan to dominate Asia, warning of what some analysts have called a “String of Pearls” geoeconomics strategy whereby China creates unsustainable debt burdens for its Indian Ocean neighbours in order to seize control of regional choke points. In particular, New Delhi has long been unsettled by China’s decades-long embrace of its traditional rival, Pakistan. Meanwhile, India has provided its own development assistance to neighbours, most notably Afghanistan, where it has spent $3 billion on infrastructure projects.
- The United States views India as a counterweight to a China-dominated Asia and has sought to knit together its strategic relationships in the region via the 2017 Indo-Pacific Strategy. Yet, despite U.S. misgivings, India was a founding member of China’s Asian Infrastructure Investment Bank (AIIB), and Indian and Chinese leaders have invested in developing closer diplomatic ties.
- Japan- Tokyo has a similar strategy, balancing its interest in regional infrastructure development with long-standing suspicions about China. In 2016, Japan committed to spending $110 billion on infrastructure projects throughout Asia. Japan has, with India, also agreed to develop the Asia-Africa Growth Corridor (AAGC), a plan to develop and connect ports from Myanmar to East Africa.
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Belt and Road Initiative (BRI)
Europe-Several countries in Central and Eastern Europe have accepted BRI financing, and Western European states such as Italy, Luxembourg, and Portugal have signed provisional agreements to cooperate on BRI projects. Their leaders frame cooperation as a way to invite Chinese investment and potentially improve the quality of competitive construction bids from European and U.S. firms.
- Others disagree- French President Emmanuel Macron has urged prudence, suggesting during a 2018 trip to China that the BRI could make partner countries “vassal states.”
- Other sceptics connect the BRI with climate change. The Institute of International Finance analyses risk for large Western banks, has reported that 85% of BRI projects can be linked to high levels of greenhouse gas emissions. Others claim that China is using BRI funds to gain influence in Balkan countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Montenegro, North Macedonia, Romania, Serbia, and Slovenia) that are on track to become EU members, thereby providing Chinese access to the heart of the European Union’s common market.
- Moscow has become one of the BRI’s most enthusiastic partners, though it responded to Xi’s announcement at first with reticence, worried that Beijing’s plans would outshine Moscow’s vision for a “Eurasian Economic Union” and impinge on its traditional sphere of influence. As Russia’s relationship with the West has deteriorated, however, President Vladimir Putin has pledged to link his Eurasian vision with the BRI. Some experts are sceptical of such an alliance, which they argue would be economically asymmetrical. Russia’s economy and its total trade volume are both roughly one-eighth the size of China’s—a gulf that the BRI could widen in the coming years.
Belt and Road Initiative (BRI)
Conclusion
- BRI is President Xi’s most ambitious foreign and economic policy initiative. Much of the recent discussion has concerned the geopolitical aspects of the initiative. There is little doubt that the overarching objective of the initiative is helping China to achieve geopolitical goals by economically binding China’s neighbouring countries more closely to Beijing. But there are many more concrete and economic objectives behind BRI that should not be obscured by a focus on strategy.
- The most achievable of BRI goals will be its contribution to upgrading China’s manufacturing capabilities. Given Beijing’s ability to finance projects and its leverage over recipients of these loans, Chinese-made high-end industrial goods such as high-speed rail, power generation equipment, and telecommunications equipment are likely to be used widely in BRI countries. More questionable, however, is whether China’s neighbours will be willing to absorb its excess industrial capacity. The lack of political trust between China and some BRI countries, as well as instability and security threats in others, are considerable obstacles.
- Chinese bankers will likely play a key role in determining the success of BRI. Though they have expressed their public support for President Xi’s grand vision, some have urged caution both publicly and in private. Their appetite to fund projects and ability to handle the complex investment environment beyond China’s border will shape the speed and the scale of OBOR. There is a general recognition that this initiative will be a decade-long undertaking, and many are treading carefully.
Belt and Road Initiative (BRI)
Source: The Hindu, cfr.org & lowyinstitute.org
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