China’s Belt and Road Initiative (BRI): Unwieldy and Opaque
By Cameron Munter, Skytop Contributor / September 7th, 2021
Cameron Munter served as ambassador to Pakistan at the time of the Bin Laden raid. He was ambassador to Serbia during the Kosovo independence crisis. He served twice in Iraq, in Mosul as Provincial Reconstruction Leader and in Baghdad as Deputy Chief of Mission. In the course of three decades as a career diplomat, he was also NSC Director in the Clinton and Bush White Houses, and served overseas in Warsaw, Prague, and Bonn.
Munter studied at Cornell and earned a PhD in history from Johns Hopkins, and has taught at Pomona College, Columbia University School of Law, and UCLA.
Currently a consultant in New York, Munter was President and CEO of the EastWest Institute, a nonprofit engaged in global conflict prevention. He is a member of the Council on Foreign Relations and the American Academy of Diplomacy, and serves on numerous corporate and nonprofit boards.
The BRI Defined
The BRI is a global infrastructure development strategy adopted by the Chinese government in 2013. It’s aim is to invest in nearly 70 countries and international organizations and is considered at the center of the Chinese Communist Party (CCP) general secretary and Chinese leader Xi Jinping‘s foreign policy.The BRI is not a centralized, strategically planned project. While it has been described, even by Chinese leadership, as a massive undertaking, it is not one that was thought out and carefully executed.
“Belt” refers to “Silk Road Economic Belt” or the proposed overland routes for road and rail transportation through landlocked Central Asia along the famed historical trade routes of the Western Regions; whereas “road” is short for the “21st Century Maritime Silk Road“, referring to the Indo-Pacific sea routes through Southeast Asia to South Asia, the Middle East and Africa.
Examples of BRI infrastructure investments include ports, skyscrapers, railroads, roads, airports, dams, and railroad tunnels.
Need for Domestic Infrastructure
First and foremost, its goals are domestic. That is, China’s leadership sought to lessen the wealth disparity between the wealthier regions of the eastern coast and the poorer ones of the interior, particularly in far-off provinces like Yunnan and Xianjiang. The impetus has been to help those western regions by linking them with economic opportunities further west – to export surplus capital, production (steel, cement) and labor to countries on China’s periphery needy of infrastructure development.
This has, of course, expanded so that China’s periphery is understood to extend to the Atlantic and beyond, including Africa and even Latin America. But this mobilization of money and people was not preplanned. Indeed, the BRI has no master plan and no real institutions of oversight. The Council on Foreign Relations, in a recent publication, described the BRI “more a Chinese branding exercise than an institution.”
What’s In It for China?
At the very least, it’s a way to use excess capacity. Additionally, it’s a way to establish Chinese influence in neighboring lands, and in a broader sense, to ensure that Chinese technical standards are competitive if not dominant in infrastructure development. It has the added benefit of creating a strong alternative to the Washington-based International Financial Institutions (IFIs) that have long called the shots on development investment; and (notably on the minds of western analysts) parallel prospects for projection of military power far from the Chinese homeland.
On Plan for Years
Indeed, many of today’s BRI projects were imagined and even begun long ago. The famous port of Colombo, Sri Lanka (in which the Sri Lankans, unable to service their debts to the Chinese for infrastructure work at the port, have been compelled to lease the port for 99 years to China). The base in Djibouti (where China’s lone military outpost in this part of the world is located down the road from an American base as well); and most obviously, the China-Pakistan Economic Corridor (CPEC) are ideas that existed for years and have been identified and energized by the concept of the “New Silk Road.”
The BRI was first announced by the new Chinese party leader Xi Jinping in 2013, and only described in its current form after the Party Congress of 2017 (when it was written into the Chinese constitution). At that time, the idea of the BRI had taken root in China. The Party Congress projected that the constellation of infrastructure projects would be complete (as so many other aspirations of the CCP) in 2049, the centennial of the founding of the People’s Republic.
The impulse for Xi may have been to provide a lifeline to state-owned enterprises who had not done well under the comparatively liberal economic policies of his predecessors; but this canny domestic move soon became overshadowed by the power of this branding exercise.
Expansion through Linking Regions and Markets
Broadly, the BRI is a series of concepts knitted together: for example, a New Eurasia Land Bridge to Russia and ultimately to Europe via Central Asia; a China-Indochina Peninsula Corridor, extending all the way to the far end of the South China Sea; CPEC, linking Xianjiang by rail, pipeline, and road to Pakistan’s Gwadar Port on the Arabian Sea; and others, including a very broadly defined Maritime Silk Road through the Straits of Malacca that ultimately would link China to ports such as Italy’s Trieste and Greece’s Piraeus, where infrastructure on the ground is already in Chinese hands.
Chinese Financing Terms
The projects are mainly carried by the Chinese-based Asian Infrastructure Investment Bank (AIIB), created in 2015. The AIIB provides financing that has proven attractive to countries in China’s near abroad, particularly those who need massive infrastructure development (estimates of 900 billion dollars are common) that is not forthcoming from other IFIs, and moreover, are available without the strings attached (budgetary reform, human rights behavior) associated with the IMF and the other Bretton Woods institutions.
With its smooth-talking international staff, the AIIB has the veneer of a multilateral institution, but this is hardly the case. It follows the needs of China, providing the kind of “win-win” agreements that Xi himself has trumpeted. These offers are more than welcome in many of the autocratic (or corrupt) countries around the world who resent terms from western banks they see as moralizing.
Even if this may look like a generous offer from China, it turns out these loans (whose terms are notoriously opaque, which is of course satisfactory to both lender and borrower) are not concessionary, but rather, are made at market rates. Thus, say, a railway line through a Central Asian country, built with Chinese know-how, labor, and materials, looks mighty attractive to a leader who has neither resources nor a good credit rating, and who can take credit for producing something for his people today while looking into the fairly distant future when the bill will fall due.
High Priced Projects and Adoption of Long Term Risk
This focus on webs of roads, railways, pipelines, and power generation capacity, while it launched the BRI, has expanded since 2013 to talk about a Digital Silk Road, a Health Silk Road, and a Green Silk Road, in which innovation and newer global technologies would become part of the export China seeks. No doubt there is a market for what the Chinese offer: evidence suggests that Chinese inroads in the western hemisphere, for example, have been the result of lobbying by Latin American leaders as much as aggressive salesmanship by Chinese companies.
There has been some pushback in recent years. The Malaysian government originally supported BRI enthusiastically, noting its nonalignment in the increasingly fractious relationship between China and America, and sought a series of high-priced projects. And yet in 2020 the Malaysians cancelled a ten-billion-dollar project, the Melaka Gateway, citing insufficient oversight and putting into doubt future BRI projects there. Even staunch Chinese ally Pakistan has expressed concern about the price tag for the myriad projects, mainly in power generation, taken on as part of the CPEC: by the end of 2020, Pakistan’s sovereign debt reached nearly 300 billion dollars, more than 100 percent of GDP. Efforts by Pakistan’s government to restructure three billion dollars of debt were rebuffed by China in May 2021.
Other less sympathetic voices, from India’s Brahma Chellaney to the President of Tanzania, have voiced criticism of BRI as a debt trap. The CFR, covering the years from 2001-2020, reports that China rarely cancels debt, preferring to prolong debt distress.
A Challenge to Western Governance of Investments
In sum, many western observers see the BRI has a government-steered plan to expand Chinese soft power. Indeed, China’s influence will doubtless spread as a result of its anticipated expenditure of more than a trillion dollars. But it’s a ground-up process, not something run out of a tightly organized office in Beijing. Beijing simply can’t keep track of the thousands of projects, and this allows potential for corruption, incompetence, and waste.
While it’s rightly seen as a challenge to western forms of governance in investment, how to address that challenge is still an open question. BRI projects are not all the same, and so it will take careful assessment of each – not generalizations about the whole – to measure the impact and ultimately the success of what the BRI will achieve.