In Pakistan, there’s a new highway. And a new Kazakh Rail Terminal. A seaport recently opened in Sri Lanka. Also a bridge in rural Laos. What is interesting is that they are all part of a single-country initiative that covers three continents and impacts more than 60 percent of the world’s population. When you connect the dots, it’s not difficult to see what country that is. This is China’s Belt and Road Initiative— the most ambitious infrastructure project in modern history intended to reroute global trade. That’s how China is planning to become the next super-power in the world. In fact, according to PwC projections for 2030 and 2050 in market exchange rate (MER) terms, they project China to overtake the US in 2028 despite its projected growth slowdown. In world GDP in PPP terms China is already the world’s biggest economy.
The Belt and Road initiative
There are two constituents to this initiative. There is a six-corridor overland economic belt that serves as a new hassle-free route for goods to move in and out and China. For example, The Yiwu-London railway line a railroad that connects China to London. From Yiwu, a trade hub 300 km south of Shanghai, the track crosses nine countries: China, Kazakhstan, Russia, Belarus, Poland, Germany, Belgium, France, and the United Kingdom. To get to the United Kingdom, the track crosses the Channel Tunnel between France and the United Kingdom. Covering an approximate distance of 12,000 km (7,500 miles). This makes it the second-longest railway line in the world after the Yiwu-Madrid railway line, which spans 12,874 km, the world’s longest rail freight route. China has also constructed a pipeline from the Caspian Sea to China. And a high-speed rail network in South East Asia.
Then there is the Maritime Silk Road— a network of seaports extending from the South China Sea to Africa, which also guides trade to and from China. To make the trade with China easier for the world the BRI also includes oil refineries, industrial parks, power plants, mines, and fiber optic networks.
More than 60 countries officially have signed agreements for these projects so far. And the list is growing, as China is promoting it as a win-win for all. Take for instance the flagship project of the BRI: Pakistan. Like numerous countries in Central and South Asia, Pakistan has a stationary economy and a corruption problem. It could never have attracted foreign investment before China came along. In 2001, China agreed to build a brand new harbor in the small fishing town of Gwadar. In 2018, the port, highway and rail networks within the BRI became a $63 billion corridor. That is where the Maritime Silk Road crosses the road network. And both countries had seemed to benefit. In eight years Pakistan has seen its fastest GDP growth and built a close relationship with a major world power like China. On the other side, China has developed a new alternative route for commodities, Middle East oil and gas in particular. It also discovered a way to improve their economy through ventures like these.
The major Chinese construction companies that had fewer opportunities within China have seen a huge upsurge from BRI contracts — three out of the top 10 largest construction firms in the world are now Chinese firms. China also has benefitted from the requirement that it be involved in the construction of major overseas projects. In Pakistan, for example, Chinese workers have constructed projects directly, such as a highway, and a Chinese company has collaborated with locals to construct a railway line in Serbia. The presence of China is one of its very few demands and that has characterized those deals so far. Look, generally, countries have to meet strict ethical standards to get investment from the West. But China’s offered billions of dollars with far less conditions— mostly in loans. So, it’s no wonder the BRI was a big hit with the region’s least-democratic countries. So, it’s no surprise the BRI was a big hit with the region’s least-democratic countries. China has concluded beneficial deals with military-regime and authoritarian governments and with some of the world’s most discorded countries like Afghanistan, Russia, Yemen, and Iraq; all of which are currently fractured by violence. Several analysts have dubbed the BRI a risky initiative because of China’s ability to lend money to vulnerable countries. Such countries will possibly have to compensate China — but corruption and violence make the payback impossible. A recent report showed that many countries that are indebted to China are vulnerable, including eight countries that are at high risk of failing to pay.
So why does China keep lending?
Because there is more to the BRI than just economics: in Sri Lanka, China has lent around $1.5 billion to a new deep-water port. It was a crucial stop along the Maritime Silk Road. But by 2017 it was clear that Sri Lanka could not pay back the loan, so instead, as part of a 99-year deal, they gave China control of the port.
China also owns Pakistan’s strategic port-where it has a 40-year contract, it is pressing for a similar deal in Myanmar, and it has just finished setting up an actual Chinese naval base in Djibouti known as the Chinese People’s Liberation Army Navy (PLAN).
The String of Pearls theory
All of these are indicators of what is called the Pearls String theory. This predicts that China is attempting to set up a string of naval bases in the Indian Ocean that will enable it to station ships and guard shipping routes moving across the continent. So while China doesn’t get its money back, it still pursues some very important strategic goals.
China’s increasing influence challenges the status of the US, which has been the world’s lone superpower for decades. Isolation is a trend in the US that means that it invests less and thus loses influence throughout the world. The BRI is the manner in which China leverages influence to become a world leader. By building relationships and taking control of global trade China is well on its way.
Do you think that China will be able to ride on BRI and become the superpower it is hoping to become or the investments it is making in Pakistan, Sri-Lanka, Africa and Europe will be the cause of its collapse? More more and reports are being received as apprehensions regarding the BRI project are hitting the party countries. Recently Pakistan has scaled down many projects related to BRI and other construction developments with China over debt repayment concerns.