Updated: Sep 27, 2020
The US turns itself into an isolationist policy; China begins to increase its ambition to become a global hegemony. As Xi proposes the ambitious Belt and Road initiative in an unprecedented scale, what impacts will it have on the global society? Will China’s national interests coincide with what is needed to create an “inclusive and accountable” institution?
Last year, A wave of hope and ambition swept across Sri Lanka. China had just signed over 8 billion dollars’ worth of foreign investment as part of a grand initiative promising mutual prosperity. Sri Lanka would receive much-needed funds for the construction of crucial infrastructure, and China would gain a return on its investment and the opportunity for its companies to expand abroad. It was not long, however, before Sri Lanka was disillusioned: It was saddled with debts, increased hostility from Western nations, and infringements upon its sovereignty. Most humiliating of all, perhaps, was that it was forced to cede control of one of its major ports to the Chinese government. One of the largest scale infrastructure projects in human history, China’s Belt and Road Initiative (RBI) purports to invest a total of 900 billion dollars in 62 nations over the span of 150 years, all with a view to reviving the ancient transcontinental trade route most commonly known as the “Silk Road”. So far, investment has centered on Pakistan, Ethiopia, Azerbaijan, and Sri Lanka, all nations that are either politically unstable or outright dictatorships, and that therefore do not qualify for financial aid by Western organisations, like the International Monetary Fund (IMF), the International Bank (IB), and the African Development Bank. Targeting this gap, Chinese money has constructed ports and railroads in contract with local governments. The Chinese government has touted such investments as “Win-Win strategies”, whereby both investor and recipient benefit economically.
It is certainly a compelling rhetoric. Notwithstanding that investments in politically unstable or oppressive regimes is morally questionable, the argument can be made that political progress comes only after a certain standard of living has been achieved. By this logic, infrastructure investment projects like the RBI are exactly what these countries need: they will create jobs and increase the efficiency of commerce, which will lead to stabler and higher incomes for the populace, which will, in turn, lead to greater political awareness. Indeed, Park Chung-hee and Gaddafi are notable examples of dictators who, despite their morally reprehensible regimes, presided over remarkable economic growth. In short, if economic progress is understood as a priority (over political progress, or democratisation) in developing countries, the Chinese government’s pretext for the RBI sounds convincing, at least at face value.
What happens, however, if the investments fail to benefit recipient nations? Such a scenario turns out to be eminently possible upon closer examination of Chinese investment plans. All projects done as part of the RBI clearly stipulate the employment of Chinese corporations and labourers. The problem is, Chinese corporations often lack sufficient knowledge of local conditions to carry out the work in a way that would truly benefit their host nations. These companies, in other words, do not possess the competitiveness that free-market-driven contracts would require. If, in fact, the Chinese corporations fail to carry out the projects to satisfactory completion, there are little to no consequences that await them, protected as they are by the larger framework of the Initiative that remains almost exclusively Chinese, and therefore without checks and balances. The quandary, then, for recipient nations is that, with regard to the RBI, China wins if it succeeds, and still wins if it fails.
The two scenarios — of Chinese success and failure in benefitting recipient nations — merit closer attention. If the investments fail, China can then turn the blame to the recipient nation for failing to produce a sufficient return-on-investment. Greece’s port of Athens and several mines in Angola are clear examples. Each piece of infrastructure is crucial to the economies of the respective nations: ports facilitate trade, mines create jobs and are a source of natural resources. In both cases, the Chinese government took possession of the infrastructure after it failed to produce revenue sufficient to pay back Road-and-Belt loans. It is highly probable that this failure was at least partly due to the inefficiency of the Chinese corporations which both countries were mandated to employ. However, China rewarded itself with spoils, and Greece and Angola were left in worse economic conditions than before. This is clearly not the kind “sustainable development of institutions” spelled out as goal 16 of the United Nations Sustainable Development Goals (UNSDG), which more or less the whole world has agreed upon.
Even when the investments do succeed, however, the problem remains that the recipient nations then fall deeper and deeper into Chinese orbit. Economically, the lion’s share of the profits made by the completed infrastructure is usually funneled back into the hands of the Chinese government, as evidenced by the case of the railroad connecting Ethiopia and Djibouti. Politically, recipient nations are pressured to side with the Chinese government on various issues that affect the global community. Unfortunately, China does not have the best track record on this front: its stance has been to veto human rights resolutions at the United Nations (UN) and back autocratic regimes. In other words, the country has diametrically opposed the values of an “inclusive society” mentioned in goal 16 of the UNSDG. To fall too deeply into a country’s orbit is never a good idea; to be sucked into China’s is particularly concerning.
There is no doubt that the RBI manifests itself too often in skewed deals that favour China at the expense of recipient nations and even the global community. There is one reason not to lose hope in the Initiative completely: its sheer size. Some 362 billion dollars are funneled annually into the Third World in the name of the RBI. Given such numbers, the international community should strive to make the Initiative work as much for the world as for China. An appeal to the Chinese citizens who recognize the unfairness of the initiative would be a start. Ultimately, however, the Chinese government will need to be brought on the same page as the rest of the world: no international exchange that willfully ignores the goals of shared prosperity and human rights promotion can have a bright future.