BRI: Design of the century, or debt trap?

Dubbed as ‘design of the century’, the Belt and Road initiative generates both awe and apprehension in South and Southeast Asia, and the rest of the world too. It is on one hand seen as a conduit for peace and cooperation, inclusiveness, mutual learning and connectivity, and there is trepidation among certain quarters about China’s motives behind the project, on the other.

Such views were expressed at the ‘Asian Regional Conference on Belt and Road Initiative: Prospects and Challenges’ held in Dhaka on 12-13 September. Organised by the Bangladesh Institute for Peace and Strategic Studies (BIPSS), it was attended by experts from China, Malaysia, Singapore, Sri Lanka, Nepal and Bangladesh.

"The Belt and Road Initiative (BRI) brings forward new prospects for cooperation in South Asia," China’s ambassador to Bangladesh Zhang Zuo told the inaugural ceremony of the conference. He said South Asia and Southeast Asia are like a family and this initiative is win-win cooperation for a shared future.

The fervour of the old silk route has been revived by China in a “leaderless” world, Lailufar Yasmin, deputy director of Bangladesh Institute of Law and International Affairs (BILIA), said detailing the concept and vision of BRI and its economic, cultural and historical aspects.

The silk route, she added, was the beginning of globalisation which had been disrupted by colonisation in the 19th century. The spirit of the Silk Road - peace and cooperation, openness and inclusiveness, mutual learning, mutual benefit - was reflected in BRI, she pointed out.

Dispelling fears and apprehensions about the ‘real’ motives behind the initiative, especially if China is trying to be like the former Soviet Union. Lailufar Yasmin observed that powerful persons and contingents from China, while travelling the world over, had never shown any intention to colonise.

Emphasising the importance of educational exchange, cultural exchange, tourism, youth contact for promoting people-to-people contact, research fellow of BIPSS and head of the Bangladesh Centre for Terrorism Research (BCTR), Shafqat Munir insisted that people lay at the heart of connectivity and BRI is a people-oriented vision.

He added that BRI passed through several conflict zones in the region, but that should not be seen as a hindrance to the concept. "In fact, the initiative can assist in lessening the conflict."

BRI could also be an opportunity for sustainable ‘green’ development, said Divya Hundlani, research fellow of Lakshman Kadirgamar Institute, Colombo. China, according to a 2015 study, has invested $400 billion in green sectors.

Chinese investment in Sri Lanka began in 2005 and the Hambantota Port is a major Chinese investment. There were concerns such as ecological impacts of construction, dredging, air pollution. The conference was told that the steps needed to ensure a sustainable green BRI in Sri Lanka included enhanced FDI inflows to innovative technology transfer, targeting the use of green finance and green bonds from China and limiting investments to sustainable infrastructure.

“We know only one thing about China - we don’t know China well,” Madhu Raman Acharya, former foreign secretary of Nepal quoted former US secretary of state Henry Kissinger at the beginning of his deliberation on the Belt and Road Initiative: Future of Globalisation.

“The Silk Road has always mesmerised us as an ancient form of globalisation. The Chinese are used to thinking big. It has some of the biggest projects in the world, like the Great Wall of China,” said Acharya, who had also been Nepal’s ambassador to Bangladesh.

Referring to other parallels of the Silk Road in South Asia, he pointed to Sher Shah Suri’s Grand Trunk Road which stretched all the way from Dhaka to Delhi and Lahore and on to Kabul. “But now we are a truncated, less integrated region,” he said.

Terming BRI as a global project, the former ambassador said ‘inclusive globalisation’ was supposed to correct mistakes of previous neo-liberal globalisation. "It gave an alternative vision for globalisation."

China’s benign role in the initiative was emphasised by the fact that all five pillars of BRI -- policy coordination, connectivity, trade, financial integration, and people-to-people contact -- seek to promote globalisation. BRI is said to have a soft power dimension with China as major driver of globalisation.

Acharya emphasised that BRI had no reform conditionalities and no strings attached; it focussed on big investment in infrastructure, connectivity and trade. It is an alternative model for financing.

Detailing the opportunities that the initiative offered, he said BRI would help meet infrastructure gaps, connect countries’ supply and value chains and increase trade.

However, there is uncertainty of a cooperative international environment as populism and nationalism, as manifested in protectionism and the ensuing ‘trade war’, posed threat to global cooperation.

There are concerns about China’s increasing footprints, the hype of ‘debt trap’, unstable economic and political situation in the participating countries, its route that passes through geopolitically complex and security-wise sensitive countries. Them the question arises: Can the BRI bubble last?

There were elements that could boost the success of BRI, Madhu Raman Acharya listed: Strategic trust and confidence between important powers, creating a multilateral exercise rather than a two-way street between China and individual countries, avoiding “vanity projects” and ensuring non-cancellation of projects.

The participating countries, Acharya said, should also ensure economic viability versus political preference, avoid hype of strategic objectives and debt trap, make objective assessment of risks, avoid geopolitically sensitive projects, make plans for operationalisation and debt repayment, avoid fear of rise of China, rather seek to maximise the transformation opportunities from BRI.

On China’s part, as suggested, it should address the vagueness of the road and belt as much was ‘lost in translation’. It must ensure transparency, dispel the myth of ‘debt trap transparency’, ascertain the debt readiness and credit worthiness. The BRI should be a multilateral exercise, have complementarity with regional initiatives and avoid strategic competition.

China, experts insist, must distinguish between Sino phobia/anti-BRI propaganda and the genuine concerns and address these concerns one by one, ensure fair rules and international standards in deals, take into account environmental and equity concerns in BRI projects, connect the dots and remove the bottlenecks in connectivity, improve contract awarding procedures- make it open to non-Chinese companies and provide more trade concessions to participating countries to bring down trade deficit.

Professor Zhang Jiadong of International Relations at Centre for South Asian Studies, Fudan University, China, said that basically BRI had economic significance. “Many people see BRI as Chinese strategy, but it is not a ‘strategy’, it is an initiative. BRI is not just a vision for a new wave of globalisation. It is not a defined strategy or clear vision. It is a process shaped by China and interaction between China and partners and non-partners. Even the name is a process evolving with time. It was initially OBOR (One Belt One Road), and now is BRI.”

“Not all countries welcome BRI. They say it is China’s neo-colonialism. But that is not at all so. However, everything has some strategic significance, not just for China, but for the region.”

Professor Zhang Jiadong enumerated BRI’s strategic significance at regional level that encompassed connectivity of national infrastructure and promotion of regional integration which included free trade talks and soft integration, such as visa exemption agreements with 46 BRI countries.

It was observed that BRI is also significant at a global level when anti-globalisation and trade prohibition is rising. Its impact is bound to change traditional geo-economic projections.

Sholto Byrnes, senior fellow at ISIS Malaysia, pointed to the positive effects of BRI that had already emerged in Kunming, along the Singapore rail route where homes, a theme park, hospitals and more were appearing. He siad there was the high speed railway to Indonesia and China was also constant friend to Phnom Penh. With Pakistan it had the massive CPEC project, the conference was told. It has signed deals involving investment of around $40 billion with Bangladesh. BRI is fluid in nature.

India may not have joined the BRI, but it could in effect participate in the initiative.

Byrnes said investment creates jobs and new infrastructure as a game changer, and draws in tourists and highly skilled professionals from around the world. The region badly needs investment and infrastructure.

He said BRI is termed by some as a debt trap, with Sri Lanka as an example, where some said it meant selling sovereignty to China. Chinese projects meant Chinese workers, equipment, loans, not gifts or FDI.

It was recommended that in order to allay such suspicions, China can correct perceptions, explain more, elaborate on how many jobs BRI will create and emphasise that BRI is part of the Asian Century.

Dwelling on infrastructure and prospects of development, Lin Minwang, associate professor and deputy director of Centre for South Asian Studies (ISAS), Singapore, referred to China’s new diplomacy where it held Afghanistan peace talks and corroborated with the Middle East.

Lin Minwang saw Asia as a community of common destiny. The neighbours expect China to be more active in the neighbourhood and there is an impact of China’s policy in Asia. Japan has found it difficult to accept China’s rising. China’s economy used to be 10 per cent of Japan’s GDP and in 30 years had become 201 per cent of Japan’s GDP. It is a superpower in terms of economy.

Hernaikh Singh, senior associate director, NUS Institute of South Asian Studies (ISAS), Singapore, compared the initiative to a dinosaur. Everyone watches it in both awe and apprehension.

There were common regional challenges. India is the biggest critic of BRI as well as CPEC (China-Pakistan Economic Corridor). Sri Lanka was boycotted internationally in their post-war period and that was when China stepped in with its investment. China has investment in Bangladesh, in Afghanistan and more.

In Southeast Asia, Singapore and China’s cooperation and connectivity is already working. Thailand since 1975 has economic relations with China and Malaysia, despite certain hitches.

The Silk Road already existed and has been recreated in the form of BRI, a concept of President Xi Jinping who called it the project of the century, said BIPSS president Muniruzzaman, rounding up the two-day conference. It, he said, is a project of peace and cooperation with the same spirit as the Silk Road.

A total of 71 countries have joined the initiative. China has already invested $900 billion in the project. The maritime Silk Road is about global maritime connectivity and BRI will reshape the maritime connectivity of the Indian Ocean region, he said.

Muniruzzaman, a retired Major General, said although BRI is a people centric initiative, there is a lack of strategic trust, a deficit to be worked on. China needed to engage countries, powers, people, address the key concerns about BRI, underpinnings of globalisation.

As to references of the debts traps, he pointed out that debts were not imposed, they were also taken by the recipient countries. Ironically, no such accusations were levelled against IMF or any member of the Bretton Woods system. It became an issue when the loans came from China.

There is need for better articulation of the strategy of BRI to address fear and suspicions. At the same time, it needs to be clear that BRI is not China’s project, it is a collective project. It is not a military endeavour, but aimed at economic development.