The Modern Silk Road: China’s Belt and Road Initiative

Envisaged by the Chinese government as an initiative to create a win-win cooperation for all countries involved, the Belt and Road Initiative is unprecedented in its scope, aim and funding. However, the project has also received a score of criticisms.

In the autumn of 2013, China’s President Xi Jinping launched his country’s most ambitious development project termed then as the One Belt, One Road (OBOR) project or presently called as the Belt and Road Initiative (BRI). Unprecedented in its scope, aim and funding, this international project aims to provide the principally involved regions, more specifically Asia, Europe and Africa, enhanced cross-border trade and increased infrastructures through its overland and maritime connections, such as roads, railways, airports, ports and telecommunication networks. It is envisaged by the Chinese government as an impetus for countries to recover from the most recent global financial crisis, and thus to create a win-win cooperation for all stakeholders in terms of common development and prosperity. This initiative takes its roots in the ancient Silk Road, a network of trade routes built during the Han Dynasty of China that linked the said continents between 130 BCE-1453 CE.

Belt and Road networks

The modern day Silk Road consists of the “Belt” and the “Road” networks. The former (the Economic Belt) refers to the overland road and rail routes that ease connections between China, Central Asia, Russia and Europe. At the heart of it are the linkages from China to Europe through Central Asia and Russia, from China to Middle East through Central Asia, and from China to Southeast Asia, South Asia and the Indian Ocean. On the other hand, the latter (the Maritime Silk Road) points to the maritime counterpart that involves a network of coastal ports and infrastructures that connect China to Europe through the South China Sea and the Indian Ocean, and from China’s coast to the South China Sea and the South Pacific Sea. Moreover, there are six international economic corridors that traverse through the countries affected: 1) New Eurasia Land Bridge Economic Corridor, 2) China-Mongolia-Russia Economic Corridor, 3) China-Central Asia-West Asia Economic Corridor, 4) China-Indochina Peninsula Economic Corridor, 5) China-Pakistan Economic Corridor, and 6) Bangladesh-China-India-Myanmar Economic Corridor.

This humongous project naturally requires a colossal budget as well. In the report released by HSBC in June 2018, the pooled funds from the Asian Infrastructure Investment Bank (AIIB), Silk Road Fund and BRICS-led New Development Bank (NDB) are approximately US$1.1 trillion already. However, the projected funding needed between 2010 to 2020 alone is a hefty amount of $8 trillion. In the latest annual fiscal report of China, their government committed itself to still allot greater financial budget to diplomacy, raising it by 15.6 per cent to 60 billion yuan or US$9.45 billion. Although the specifications were not laid down, sources said that this increase pertains to the diplomatic and technical resources to carry out the projects under the BRI.

The various projects that have been carried out since its launch in 2013 already yielded positive results. According to The Belt and Road Big Data Report 2017, some of the milestone achievements of the BRI as of November 2017 are the following:

  • Belt and Road transnational cooperation index enjoys an increase of 3.5% from 2016 to 2017.
  • By the end of September 2017, China has made cooperation documents with 74 countries and international organizations.
  • China has established about 700 sister-city relations with 53 countries, 66 more than in 2015.
  • China’s trade with countries along the routes had slightly increased from 25.4% in 2015 to 25.7% in 2017.
  • The total amount of Chinese enterprises’ non-financial direct investment in 53 countries along the routes reached 14.53 billion USD.
  • The countries along the routes have been able to establish 2,905 enterprises in China, totaling to an investment worth 7.1 billion USD.
  • An estimated 25 million tourist trips have been made between China and the countries along the routes.

From the point of view of China, these above mentioned gains serve as a proof to their BRI vision as a symbiotic cooperation that will create mutual benefits to all the countries involved. As China’s economy better, its outbound direct investment now exceeds its inbound foreign direct investment. The country needs new overseas markets to tap in order to address their domestic overcapacity. From the viewpoint of the developing countries which are tainted with insufficient infrastructures, low investment rates and low per-capita incomes, the BRI is a credit source which they could utilize to pump up their infrastructure development, which in turn, can improve their trade flows and economic growth.

Criticisms against Belt&Road

Despite the positive image that China wants to project for its BRI, there have been criticisms hurled against it. For instance, the assistance that is extended by China to the developing countries is still in the form of loans, and the interest rates for these have increased from 2.5 to 5 percent or more. The dealings involved in this initiative could also open up new opportunities for graft and corruption. China deals with countries that have a poor record in accountability like Turkmenistan, Kyrgyzstan, Cambodia and Myanmar. China itself also does not fair well in transparency ranking. In the 2017 Corruption Index of Transparency International, China’s rank is 77 out of 180 countries, and it had a score of 41 out of 100 (0 being highly corrupt and 100 being very clean). Complaints from its developing partner countries have also been raised against the Chinese firms participating in BRI projects such as not heeding safety standards, utilizing secondhand or low-quality materials and equipment, and constructing of environment-hazard projects like coal-fired power plants.

Furthermore, the developed countries have also conveyed their concerns about the BRI. US Defence Secretary Jim Mattis stated last year that “No one nation should put itself into a position of dictating [BRI]”. Earlier this year, 27 out of 28 European Union ambassadors to China signed a report stating that the BRI “runs counter to the EU agenda for liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies”. Japan, an economic giant in Asia, has taken the lead to counterbalance the influence of China’s BRI in Asia through its Indo-Pacific alliance. India, which is a fast-growing economy, has been embroiled in a standoff with China, and thus did not send any representative to the BRI forum held in 2017. Its hostility toward China is ascribed to the latter’s China-Pakistan Economic Corridor which involves the Pakistan-occupied Kashmir, an area that is claimed by India.

To conclude, if the Chinese government is indeed sincere in its vision for mutual cooperation for all the countries engaged in the BRI, it has to show that they are taking stock of the criticisms against their foremost initiative and that they are doing something about them. To assuage the unease and fears of the reluctant countries, China has to prove them that these are unfounded.

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