China’s BRI raises fears

The debt trap

China’s Belt and Road Initiative (BRI) is creating ripples around the world because of its perceived hidden agenda of creating situations in which smaller nations engaging with BRI run the risk of falling into debt trap. China has spared no effort to portray its BRI, a grand trillion-dollar-plus global investment plan, as a positive vision for the world. But not everyone is convinced that it is such a great plan, either for China or for the countries it is investing in. 

Since the BRI runs through the China-Pakistan Economic Corridor from Xinjiang in China to Gwadar in Balochistan, encompassing Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan, the sovereignty issue remains the bone of contention between India and China. That the BRI aims to build land and sea links between China and Europe through roads, railway lines, power projects and ports in potentially over 60 countries presents another crucial challenge for India — the project is a unilateral, Chinese national initiative, and passes through regions that impinge on India’s security.  

Notwithstanding the reservations India has on BRI, during the Wuhan summit in April 2018, India and China agreed to undertake a joint India-China economic project in war-torn Afghanistan, which could upset Pakistan.

As per the agreement, the two sides will jointly identify the project to be carried out. Pakistan has been accused of providing safe havens to terror groups that carry out attacks in Afghanistan, thwarting attempts to restore peace. 

As a prelude to this strategy, China for the first time held a trilateral meeting with the foreign ministers of Pakistan and Afghanistan in December 2017 in Beijing to narrow down the differences between the two countries. China also announced plans to extend CPEC to Afghanistan.

When Modi and Xi agreed to work on a joint economic project in Afghanistan, Pakistan felt uncomfortable as it has worked strenuously to exclude India from what it considers its strategic backyard. An optimistic view of India-China relations is that a joint venture between the two in Afghanistan is ground-breaking and shows that the distrust between the two has been overcome. The optimist would also point to the recent visit of China’s defence minister to India.

That Modi and Xi gave “strategic guidance” to their respective militaries to build trust and understanding and called for “prudent management of differences with mutual sensitivity” sends a clear message to Pakistan that terrorism as policy may not be profitable any more. It is for this reason that both leaders recognised the “common threat” of terrorism and iterated “strong and resolute” opposition to it. Both sides committed to cooperate on counter-terrorism. The overarching objective was to forge a common understanding of the “future direction of India-China relations”, while managing differences. 

There are many more issues between India and China that need to be sorted out. China’s opposition to India’s NSG membership and its support to Pakistan-based Jaish-e-Mohammed chief Masood Azhar, blocking a UN ban, need to be resolved through dialogue. Therefore, the dialogue mechanism needs to be strengthened. 

Though China wants India to participate in BRI, India’s position remains unchanged. China wants to use connectivity and infrastructure development in neighbouring regions to address regional imbalances within China. Since its comparative advantage as a low-cost manufacturing base is ending as wages rise, China wants to be engaged in the higher end of the global value chain. But the fear of many small countries falling into debt trap remains real. 

The Chinese strategy in this narrative seems to be to upgrade its industry, make it more innovation and quality-driven, with a view to export high-end goods to countries in the neighbourhood participating in BRI, thereby displacing Western-manufactured products. If China aspires to encourage the acceptance of Chinese technological standards as part of its ambition to “become an innovation-based economy and a leader in research and development”, it ought to work towards dispelling the fear, real or unreal, of the debt trap.

Luring India

Beijing has been trying assiduously to rope India into BRI, even describing India as a “natural partner” in the project. China has also attempted to allay Delhi’s apprehensions on CPEC, arguing that India should not be paranoid about this project because it does not affect China’s neutral stance on the Kashmir issue. China’s assistant foreign minister Zhang Jun took pains to assure India that “CPEC is an economic initiative and that implementing CPEC does not change China’s position on Kashmir”. India is firm that as the project runs through PoK, it violates India’s sovereignty. 

The larger concern, however, is that the BRI is pushing other countries into debt and even leading to creation of Chinese military bases in some cases.

Recently, Malaysia said that it had shelved two major infrastructure projects being built by Chinese companies because of high costs, which is making many more leaders around the world wonder whether Chinese investment is actually a good deal.

In Sri Lanka, China poured money into an airport designed to handle a million passengers a year. It is now called “the world’s emptiest international airport”. Another BRI project in Sri Lanka, a deep-water port, is now in the hands of a state-owned Chinese company on a 99-year lease after the island nation failed to attract enough business to make its loan payments.

It is feared that Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan would also struggle to repay Chinese BRI loans. Thus, any comparison with Marshall Plan, America’s stimulus package for a war-ravaged Europe in the 1940s, is clearly misplaced. 

(The writer is presently Lok Sabha Research Fellow) 

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China’s BRI raises fears

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