Wed, 19 Dec 2018
22
Abu Dhabi

By Lee Kah Whye

Singapore, Nov 12 (ANI): From the gleaming new city of Khorgos sprouting out of the desert in Kazakhstan to the kilometres of shinny steel rails being laid in the countryside in Laos, China's trillion-dollar signature Belt and Road Initiative (BRI) is making an impact around the world.

President Xi Jinping announced BRI, formerly known as "One Belt One Road" to the world in visits to Kazakhstan and Indonesia in 2013. BRI is China's gargantuan infrastructure project for the developing world by helping countries build roads, railways, pipelines, ports, power plants and even cities. The aim is to replicate the ancient silk road by connecting the world via overland routes mirroring the silk road economic belt (hence "belt")and by maritime routes ("road").

Khorgos is set to be world's busiest inland cargo transit point connecting China's western-most cities to Africa, the Middle East and Europe.

Hundreds of millions of dollars have been invested in African countries including Djibouti, Kenya and Ethiopia. Billions in Asia.

At the moment, in total, over 70 countries have signed deals with the Chinese to invest in their infrastructure and industrial projects. Depending on which estimate is used, anywhere from US$210 billion to over US$300 billion has been spent.

Ostensibly, BRI aims to promote trade and investments by building transport routes for raw material, goods and services between China and participating countries and thereby generating mutual benefits of economic growth through increased trade, technology transfer and better connectivity.

However,sceptics say that this is China's way of spreading its global power.A way of winning friends and influencing people on the world stage through economic inducements to gain influence in target countries. It also helps Chinese companies expand beyond their own shores, grow their businesses overseas, and distribute out excess capacity and at the same time increase employment among its citizens. A case in point is that almost all contracts emanating from BRI goes to Chinese companies.

Which countries in Asia have benefited so far and what problems are they facing?

In Laos, the 414-kilometre Vientiane-Boten Railway being built with the help of China costs an estimated US$6 billion. This is more than a third of Laos's GDP. It will be connected to the Chinese railway system and part of the more ambitious plan to connect Kunming in China north of Laos all the way south to Singapore running through Thailand and Malaysia. Construction began in December 2016 and is scheduled to be completed by 2021. China will own 70 per cent of it. Laos's 30 per cent stake will be finance by loans from China. Although this project seems hugely beneficial to Laos - like many similar BRI projects, it won't have seen the light of day without China's support - there has been opposition

to the project due to its high costs.

Indonesia's first high-speed rail project which connects its capital Jakarta with its third largest city Bandung was won by a consortium consisting of Indonesian companies and the China Railway Corporation.The 140 km line is financed by a US$ 4.5 million loan from China. Originally slated for completion by 2019, it could be completed as late as 2024 as 40 per cent of land needed for the project has not been acquired.

Under the previous government, Malaysia inked multiple investment deals with China, worth more than US$ 100 billion including the US$ 20 billion East Coast Rail Link, pipeline projects and theUS$100 billion Forest City property development in the Southern state of Johor. However, Malaysia's new government under veteran politician Mahathir Mohamad feels that the cost of the projects is untenable and looking to re-evaluate their costs and benefits. As of now, Malaysia has officially cancelled the pipeline projects and reviewing the railway project which is likely to be cancelled or delayed.

In 2017, construction of a high-speed rail project linking the Thai cities of Bangkok and Nakhon Ratchasima began. This is expected to be further extended to Nong Khai in the North to connect to Laos to be part of the planned Kunming-Singapore railway. Although economic and strategic ties between Thailand and China has grown recently, a reassessment of BRI projects is taking place due to the potential high cost and debt. As a result, the Thai government is looking at other possible funding means.

As the Philippines consider seekingChinese funding for infrastructure plans like the Chico River Pump Irrigation Project, the New Centennial Water Source-Kaliwa Dam Project and the Philippine National Railway South Commuter Line, protestors concerned about sovereignty issues made their voices heard in Vietnam in June after the government proposed granting foreign (Chinese) companies leases of up to 99 years in special economic zones

In September, Myanmar and China signed a 15-point Memorandum of Understanding (MoU) to establish the China-Myanmar Economic Corridor (CMEC). The estimated 1,700-kilometre-long corridor will connect Kunming, the capital of China's Yunnan Province, to Myanmar's major economic centres in Mandalay in central Myanmar, and then east to Yangon and west to the Kyauk Pyu Special Economic Zone. The MoU will see the two countries collaborating in various sectors including infrastructure, construction, manufacturing, agriculture, technology, communications and transport. This after Myanmar scaled back the Kyauk Pyu deep-water port, a joint project with China, from an initial US$7.3 billion to US$1.3 billion due to fears cost will leave the country heavily indebted.

Myanmar's concerns are not without basis as news spread about BRI projects souring in in Sri Lanka and Pakistan.

China's main investment in Sri Lanka is the Hambantota Port which opened in 2010. It is mostly funded by the Chinese government and built by Chinese companies. Heavy losses and its inability to service the loan resulted in the Sri Lankan government leasing 85 per cent of the port as well as the operation of it to the Chinese for 99 years. This led to accusations that China was practising debt trap diplomacy.

After being one of the first to embrace China's BRI with the establishment of the China-Pakistan Economic Corridor (CPEC) and spending upwards of US$60 billion, the new Pakistani government under Prime Minister Imran Khan is looking to scale back its dependency on Chinese money. There are worries that some of the Chinese treaties were unequal including unfair basis of debt-equity swapsin case of its inability to service debt. It has since halted a dam project in the Himalayas and three major road projects.

Pakistan is in dire need of investments in power plants and its dilapidated rail network. Unfortunately, its funding sources are very limited. Countries and other parties are reluctant to invest as projects in Pakistan seldom make any sort of returns.

India, on the other hand sees China as a geopolitical rival and from the beginning has been sceptical of BRI. It did not take part in the BRI summit organised by China in May 2017 saying that "connectivity initiatives must be based on universally recognised international norms, good governance, the rule of law, openness, transparency and equality". However, opponents of this view expressed apprehension that India may be missing out on promising infrastructure opportunities and increased economic connectivity.

Political economy professor Zha Daojiong of Peking University, who advices Chinese official on political risk management abroad, in an interview with Channel NewsAsia (Singapore), attributes the negativity that BRI is facing to China's "learning process" with regards to executing large-scale projects overseas. Issues like transparency and alignment with international standards will improve with time.

With President Xi staking his reputation on BRI and the scale of its commitment, China will no doubt take stock, review its plans and make the necessary adjustments including slowing down projects to ensure the success of the Belt and Road Initiative. (ANI)

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