The Belt And Road Initiative And The Promise Of Development: Economic Empowerment, Debt-Trap Diplomacy And Security Risks

In September 2013, during a visit to Nur-Sultan (formerly Astana), Kazakhstan, President Xi Jinping of China spoke of an initiative that would “open the strategic regional thoroughfare from the Pacific Ocean to the Baltic Sea, and gradually move toward the set-up of a network of transportation that connects Eastern, Western and Southern Asia.” This was the announcement of the project that has come to be known as the Belt and Road Initiative (BRI) – essentially, a series of investments in infrastructure that seek to connect China with economies throughout East, South, and Central Asia and on to the Middle East and Europe in an effort to grow even further China’s economic and strategic footprint. This initiative can be looked at from various perspectives: the first is best outlined by a report from the Asia Society Policy Institute, stating that, “the initiative will help fill the pressing need for infrastructure development; bolster trade, financial, and people-to-people connectivity; enhance policy co-ordination; and facilitate financial integration. All are undoubtedly admirable goals, however there are still negative connotations attached to this project, with some accusing it of being a thinly veiled attempt to exploit economic power for political objectives and consequently weaken the sovereign rights of the states involved, while simultaneously being susceptible to economic, ecological and security risks.  The BRI could be an effective development strategy for much of the global South in the context of distrust of established multilateral development banks or it could be a geopolitical strategy to enhance China’s interests in the international system and cut the United States out of the ever-advantageous dynamic economies of Asia.

Economic Empowerment

China describes the BRI as “win-win” global co-operation, a new system in which the Chinese government will take an inclusive, interactive and integrated approach to common development. For those participating in the initiative, most recognize that intentions are unlikely to be as altruistic as China is marketing it. However, the practical reality is that with the European Union and United States looking more inward, what alternative is there for developing states to find financing with few requirements? In effect, the BRI could bolster economic co-operation with the states and regions in question, moving them past primary-stage industrialization and fixing infrastructure while building an international system which can function as a mechanism for the peaceful rising of China.

Economic Empowerment for Whom?

The BRI includes 65 countries from all over the world and, according to an article published by the University of Bucharest, involves more than 4 billion people from three continents with a cumulative GDP of around US$ 21 trillion. Although China has repeatedly downplayed the strategic elements of this initiative, with a reach that large the strategic advantage can’t be overlooked. China is looking to strengthen its already dominant position as an economic superpower in Asia, expanding its market share at a global level. Unsurprisingly, regardless of the countless “win-win” statements, this integral component of Chinese foreign policy favours the interests of China, combating the industrial overcapacity and weakening momentum for high-speed economic growth in the context of a slumping global economy and the U.S. “pivot to Asia.”

Clearly, the possible benefits for China are immeasurable, though the promise of mutual benefit may be a hollow one. China can expand its influence and relative advantage through debt diplomacy, gaining favourable access to the projects it funds as a form of loan repayment. This can be seen in Sri Lanka, with the acquisition of Hambantota port by China: Sri Lanka handed over the port and 15,000 acres of land around it for 99 years as it did not have the capacity to cope with repayments after accepting development loans as part of the BRI. This has allowed China to control territory just a few hundred miles away from a major regional rival, India, and gain a strategic foothold in a critical waterway, which is a seemingly rather explicit example of China using loans to gain influence. This behaviour is not unique, according to a study by the International Monetary Fund (IMF): “From 2013 to 2016, China’s contribution to the public debt of heavily indebted poor countries nearly doubled from 6.2 percent to 11.6 percent.” Economic feasibility is of little concern for China, the strategy that was supposed to benefit all seems to be motivated by China’s desire to stimulate its own economy, gain strategic assets, and convert debt trap into political and strategic influence in recipient nations.

Security Challenges for the BRI

The BRI faces multiple security challenges, all of which could hamper development. This portion of the report will look specifically at ecological challenges, as well as the question of working in politically tumultuous regions of the world. Although China is frequently lauded by the international community for its efforts to combat climate change, there is the notion that the Belt and Road Initiative has a large and detrimental environmental impact, functioning as a smokescreen for China to outsource its environmental degradation to poorer, vulnerable countries. Just one example is that the ecological implications have been neglected in a proposed hydroelectric dam in Northern Sumatra, Indonesia. This would threaten the survival of the Tapanuli Orangutan, with ecologist William F. Laurance warning that the “project will slice its tiny remaining habitat in half via the roads, power-line clearings, and massive pipeline required for the project, along with flooding some prime habitat for the ape.”

The other fundamental challenge is the risk associated with working in politically galvanized situations. One example is China’s interest in East Africa, as almost every state in that region experiences political instability during election years, often spiralling into fatal violence and causing socio-economic damage. This can lead to corruption, an accusation that is commonly associated with the BRI.

The Belt and Road Initiative has the potential to be a driving force for development in the global south and can also help facilitate the peaceful rise of China.  In the context of Western implosion China offers “no strings attached” investment for developing nations, an offer that could be interpreted as philanthropical.  However, in the same breath, the BRI has been viewed as a geopolitical strategy for China that faces multiple practical challenges and does not have the interests of developing states at heart.

Zac Williams