China’s Belt and Road Initiative

China’s Belt and Road Initiative

Subject: IR

Context: At the recently concluded summit of G7 leaders in Germany, United States President Joe Biden and his allies unveiled their $600-billion plan called the Partnership for Global Infrastructure and Intelligence (PGII) to build infrastructure projects in developing and middle-income countries. This is being seen as a counter to China’s Belt and Road Initiative (BRI), valued at a trillion U.S. dollars by some experts.

What is China’s Belt and Road Initiative?

• In 2013, Chinese President Xi Jinping, during his visits to Kazakhstan and Indonesia, expressed his vision to build a Silk Road Economic Belt and a 21st Century Maritime Silk Road, to break the “bottleneck” in Asian connectivity. This vision led to the birth of the BRI.
• More than 60 countries have now joined BRI agreements with China, with infrastructure projects under the initiative being planned or under construction in Asia, Africa, Europe, and Latin America.
• To finance BRI projects, China offers huge loans at commercial interest rates that countries have to pay within a fixed number of years.
• The west has accused China of debt-trapping by extending “predatory loans” that force countries to cede key assets to China.
• However, research indicates that low and middle-income countries are often the ones to approach China after not being able to secure loans from elsewhere.
• In recent years, the BRI seems to have experienced a slowing down as annual Chinese lending to countries under the initiative slimmed from its peak of $125 billion in 2015 to around $50 to 55 billion in 2021.

BRI’s investments in Pakistan

• On his 2015 visit to Pakistan, Mr. Xi and then Pakistan Prime Minister unveiled the BRI’s flagship project and its biggest one in a single country the China Pakistan Economic Corridor (CPEC).
• China–Pakistan Economic Corridor (CPEC)
  • China–Pakistan Economic Corridor (CPEC) is a collection of infrastructure projects that are under construction throughout Pakistan since 2013.
  • At the centre of the CPEC was the $700 million development of the city of Gwadar into a smart port city that would become the “Singapore of Pakistan”.
  • CPEC passes through the disputed region of Kashmir where Indian and Pakistani border guards have occasionally exchanged fire across the Line of Control. The Government of India, which shares tense relations with Pakistan, objects to the CPEC project as upgrade works to the Karakoram Highway are taking place in Gilgit Baltistan; territory that India claims as its own.
  • May 2022, Chinese power firms operating in Pakistan threatened to close down coal plants if the latter did not pay dues worth 300 billion in Pakistani rupees (approximately $1.5 billion).

What about Sri Lanka?

• In Sri Lanka, multiple infrastructure projects that were being financed by China came under the fold of the BRI after it was launched in 2013.
• In 2021, Colombo ejected India and Japan out of a deal to develop the East Container Terminal at the Colombo port and got China to take up the project.
• Unable to service the huge loan and incurring $300 million in losses due to delays, the government handed Hambantota port to a Chinese state-owned company on a 99-year lease in 2017.
• Other key projects under BRI include the development of the Colombo International Container Terminal, the Central Expressway and the Hambantota International Airport among others.

Are there projects in Afghanistan?

• Afghanistan has not comprehensively been brought into the BRI, despite a Memorandum of Understanding (MoU) being signed with China in 2016.

How have projects from India and China progressed in Maldives?

• One of the most prominent BRI projects undertaken in the Maldives is the two km long China-Maldives Friendship Bridge — a $200 million four lane bridge.
  • Most of China’s investment in the Maldives happened under former President Abdullah Yameen, seen as pro-China. Over the years, opposition protests grew against the large borrowing from China and Mr. Yameen was defeated in 2018.
• The Maldives’ current regime of President has tried to distance itself from the BRI, focusing more on its ‘India First’ policy.
• India has also in recent years sought greater ties with the Maldives under Prime Minister Narendra Modi’s ‘Neighbourhood First’ policy.

What about Bangladesh?

• Bangladesh, which joined the BRI in 2016, has been promised the second-highest investment (about $40 billion) in South Asia after Pakistan.
• In 2016, when the Chinese government promised Dhaka BRI investment worth around $40 billion, India followed up in 2017 by extending a $5 billion line of credit and economic assistance.
• BRI projects include China-Bangladesh Friendship Bridges, special economic zones, the $689.35 million-Karnaphuli River tunnel project, upgradation of the Chittagong port, and a rail line between the port and China’s Yunnan province.