CHINA’S BELT AND ROAD INITIATIVE

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Context: At the recently concluded summit of G-7 leaders in Germany, U.S. President Joe Biden and his allies unveiled their $600 billion plan called the Partnership for Global Infrastructure and Intelligence which is being seen as a counter to China’s Belt and Road Initiative (BRI), valued at a trillion U.S. dollars by some experts. Therefore, there is a need to re-visit the various projects under the BRI in different South Asian countries.

Background:

• In 2013, Chinese President Xi Jinping, during his visits to Kazakhstan and Indonesia, expressed his vision to build a Silk Road Economic Belt (SERB) and a 21st Century Maritime Silk Road (MSR), to break the “bottleneck” in Asian connectivity. Thus, the Belt and Road initiative was born.
• The initiative envisioned a Chinese-led investment of over $1 trillion in partner countries by 2025. 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.

Investments in the Indian neighbourhood:

• The biggest project under BRI is in Pakistan, the China Pakistan Economic Corridor (CPEC). Over time, China pledged $62 billion in low-interest loans and financing from Chinese state-owned banks and the Asian Development Bank (ADB).
• Bangladesh, which joined the BRI in 2016, has been promised the second-highest belt and road investment by China in South Asia after Pakistan.
• 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. The island nation in the last couple of years has witnessed competition between India and China in port terminal and energy projects. 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. Some BRI projects in Sri Lanka have been described as white elephants — such as the Hambantota port.
• Afghanistan has not comprehensively been brought into the BRI, despite a Memorandum of Understanding (MoU) being signed with China in 2016
• 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.

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