By Terri Wu, EPOCH TIMES 12 January 2024
China’s $1 trillion global infrastructure investment program just turned 10, and it’s losing its luster.
The Belt and Road Initiative (BRI), touted as a platform for China to build trade and investment links in developing countries, has evolved much in the past decade.
But wariness from countries in recent years has grown, and the program has drawn criticism over issues ranging from saddling partners with unsustainable debt to fueling corruption and labor abuses.
Italy formally pulled out of the initiative in December 2023, striking a blow to the Chinese regime’s aims to expand the initiative beyond low- and middle-income nations. Italy is the only G7 country to have joined the BRI.
The Philippines dropped out a month earlier and said it would seek alternative funding for the $5 billion China had pledged for three rail lines. The country’s transport minister said the decision came after Beijing was non-responsive to funding requests.
Meanwhile, the Chinese Communist Party (CCP) has become more explicit about its plans to reshape the world. Last month, the CCP touted the BRI’s “leading role” in “accelerating the reform of the global governance system.” The project is also known as “One Belt, One Road.”
Experts have said that the commercial component of the BRI was never the focus. By design, the framework uses infrastructure investments to buy other countries’ political decisions, and economic development has served as a cover for Beijing to advance its global military ambitions.
Yao-Yuan Yeh, professor of international studies at the University of St. Thomas in Houston, told The Epoch Times that the BRI’s initial purpose was to export China’s excess industrial capacity.
“China had thought about this long ago: To have an opportunity to part ways with the capitalist world or the democratic world, China has to strengthen its market,” he said.
Chinese workers help to build a new train station, which is Chinese managed and designed, in Beliatta, Sri Lanka, on Nov. 18, 2018. (Paula Bronstein/Getty Images)
Over the past decade, China brought more than 150 countries under its BRI umbrella—a majority of the 193 United Nations member states, including countries classified by the U.N. as low-income. Currently, the United States, Canada, most of Western Europe, and a portion of South America still hold out.Mr. Yeh described the CCP’s investments as “predatory” because the infrastructure projects had to contract Chinese companies. Therefore, Chinese policy banks lend money to the host country, which then pays the Chinese contractors. “Money circles back to China without providing much help to local economies,” he said.Mr. Yeh said he anticipates that, as more host countries become aware of the nature of the BRI, if they are not stuck with heavy debt that they cannot repay, they will start pulling out, much like Italy and the Philippines.
Italy Bugs Out
Italy cited a lack of results for withdrawing from the BRI. The country signed into the BRI in March 2019, hoping to rebalance its trade with China.
As a framework agreement, a BRI memorandum of understanding (MOU) doesn’t necessarily bring concrete benefits to a host country if no specific project contracts follow.
That was the situation in Italy.
Instead of balancing its trade, Italy’s trade deficit doubled between 2019 and 2022; its exports to China slightly increased, from $14 billion to $18 billion, while imports ballooned from $34 billion to $62 billion.
Mr. Yeh said that Italy’s withdrawal might trigger a “snowball effect,” starting with countries in southern and eastern Europe.
He said the CCP isn’t keen to lend more money to low-income countries that are struggling to pay back the debt they’ve already incurred through BRI projects. Debt to China has soared in many countries; in Cambodia and Laos, BRI debts make up a fifth of their GDP.
Mr. Yeh said that the CCP may focus on the remaining countries in central Asia, the Middle East, North Africa, and the Caribbean, which need cash and aren’t aligned with U.S. values.
He said that the BRI has become a public relations tool for the CCP to grab votes at the U.N.
China is currently a permanent member of the U.N. Security Council and holds top leadership positions in other U.N. organizations of international trade, intellectual property, shipping, food, and justice.
“One of the major objectives of ‘One Belt, One Road’ is political: Silence the criticism of the Chinese Communist Party,” Li Shaomin, professor of international business at Virginia’s Old Dominion University, told NTD, sister media outlet to The Epoch Times.
“Of course, the CCP would also welcome any economic benefits,” Mr. Li, the son of a famous CCP reform theorist under former leader Hu Yaobang, said.
In the professor’s view, the BRI was hatched to answer the CCP’s need to do business with the rest of the world while blocking any external political influence—if the CCP could influence other countries politically to silence their criticism, then Chinese people would have no reason to disapprove of the Party.
Military Ambitions
The BRI was initially positioned as an economic development program.
It began in September 2013 as the “Silk Road Economic Belt,” introduced by the CCP general secretary Xi Jinping at a university in Kazakhstan. The focus was on building roads and facilitating trade.
A month later, Xi proposed the “21st Century Maritime Silk Road” during a speech to the Indonesian Legislature. At that time, it was still mainly about maritime cooperation with member states of the Association of Southeast Asian Nations (ASEAN).
Ten years later, the CCP has morphed the BRI into a new-world-order foreign policy juggernaut—an umbrella of several CPP initiatives, including its global artificial intelligence governance plan, development initiative, security initiative, and global civilization initiative. The scope has also expanded to health care, digital infrastructure, and green energy.
The development component is just a cover for military ambitions, a strategic focus by design, according to Liang-chih Evans Chen, an associate research fellow at Taiwan’s official Institute for National Security and Defense Research.
The CCP doesn’t mention the military side of the BRI because it doesn’t want to set off alarm bells in the international community, Mr. Chen told The Epoch Times.
He said that the BRI’s infrastructure investments have covered up Beijing’s increased footprint in foreign ports for its dual civilian and military use.
At the same time, the Navy branch of the People’s Liberation Army (PLA) has grown considerably. In 2015, its fleet size surpassed that of the United States, and as its navy strengthened, the CCP’s military moves became more public.
In 2016, China began construction in the 2,000-acre Gwadar Special Economic Zone next to the Gwadar Port in Pakistan, at the end of the $62 billion China-Pakistan Economic Corridor.
In December 2018, The New York Times revealed that China’s BRI program in Pakistan included military projects, such as deepened cooperation in space.
In December 2022, Maritime Executive magazine reported that “a third of ports in which China made economic investments have hosted and also resupplied military vessels of the People’s Liberation Army Navy.”
Pakistan’s Gwadar port is one of the eight BRI ports identified as future PLA naval base candidates in a July 2023 report by AidData, a research lab at the College of William and Mary in Virginia.Mike Sun, a U.S.-based businessman with decades of experience advising foreign investors and traders doing business in China, said he also thinks military considerations are a part of the BRI design. He used an alias to avoid reprisal from the Chinese regime.
Mr. Sun said that, along with infrastructure and energy projects, Beijing pushes for its ultimate goal of a “global community of shared future,” or communism under the CCP.
“The CCP intends to hold money in one hand and weapons in another. Although its military power hasn’t reached that point, that’s its next step,” he told The Epoch Times.
“I think forcefully advancing its values and worldview to combat the West is the most important idea of Xi Jinping’s BRI framework. Of course, the CCP won’t say that explicitly.”
Forced Labor, Corruption, and Debt Traps
With its investment projects, the belt and road platform has also exported to recipient countries CCP-style forced labor and corruption.
The New York-based China Labor Watch estimates that there are millions of Chinese workers on BRI projects around the world. Many are forced to work up to 12 hours a day, seven days a week, with little work protection, the watchdog reported.
“They were promised a job with good pay to support their families back in China,” the authors wrote. “Upon arriving in the host countries, however, Chinese employers confiscated their passports and told them that if they wanted to leave early, they had to pay a penalty for breach of contract, which is often equivalent to several months’ worth of their salary.”
The nonprofit concluded that Chinese workers on BRI projects fall under the category of forced labor—defined by the International Labour Organization as involuntary work “exacted from any person under the menace of any penalty.”
BRI projects have also tapped into local corruption to gain advantages. Deal terms involving personal favors have inflated the valuation of projects or skewed the business case for the recipient country.
In early 2016, then-prime minister of Malaysia Najib Razak sent an aide to China to get the United States to drop a corruption investigation into the Malaysian state fund 1Malaysian Development Berhad, according to the aide’s testimony at Mr. Razak’s trial.
In return, Malaysia signed two pipeline projects and a $20 billion railway project under the BRI framework.
After the new Malaysian prime minister took over, the pipeline projects were canceled and the railway was revalued at $11 billion.
Of the alleged $3.5 billion stolen from the fund, the U.S. Department of Justice recovered more than $1.2 billion and returned it to Malaysia.
In Sri Lanka, at least $7.6 million was paid from a BRI port construction fund to support President Mahinda Rajapaksa’s unsuccessful reelection bid in 2015, The New York Times reported.
Under Mr. Rajapaksa, Sri Lanka’s debt tripled to $45 billion, with $4.7 billion due by the end of 2015.
When the country couldn’t repay the debt, Sri Lanka agreed in December 2017 to transfer a 70 percent stake in its Hambantota Port to the China Merchants Group and allow China to lease the port and its surrounding land for 99 years.
It was then that the West began to notice the BRI’s significance, with the media widely reporting Beijing’s “debt trap diplomacy.”
Shrinking Wallet, More Wary Partners
China’s BRI handouts peaked at about $75 billion in 2017 and have declined yearly until reaching their lowest level of about $48 billion in 2020, the first year of the global pandemic.
When the CCP ended its zero-COVID policy in December 2022, the world expected China’s economy to rebound. Instead, the decadeslong issue of debt-fueled growth of its property sector and local governments weighed on a deflation that the regime doesn’t seem able to shake off.
With the policy banks entrenched in non-performing loans, China no longer has the same deep pockets it had in the 2010s—and it knows it.
At the third BRI forum in Beijing in October 2023, the CCP announced its outlook for the next decade, emphasizing “small and beautiful” projects to strengthen the scheme’s “golden brand” and pivoting toward artificial intelligence and green energy.
Meanwhile, the geopolitical climate has changed and countries are more wary of the CCP’s intentions.
A day after Italy signed its BRI MOU with China in March 2019, the European Union shifted its policy to view China as a systemic rival; China had been a comprehensive strategic partner for decades.
The current theme of “de-risking” with China in the EU had also made Italy’s BRI untenable, according to Mr. Yeh.
Part of the unspoken attraction of the BRI is China’s domestic market, Mr. Yeh said. Countries that sign up to the BRI hope to make money by selling their products and services to its massive population. However, he said, China’s trade imbalances with the EU and the United States show that access to the Chinese market remains elusive.
Meanwhile, with China’s deflation woes, the CCP has not managed to stimulate enough domestic consumption to revive its economy.
A Waning Scheme
The CCP celebrated the BRI’s 10th anniversary in October 2023 with the third Belt and Road Forum held in Beijing.
The top-level attendance from other countries was significantly lower than in earlier years, with 23 heads of state or government representatives. The Hungarian prime minister was the only leader from Europe, and Russian President Vladimir Putin was the guest of honor.
About 30 heads of state or government representatives attended the first forum, in 2017, and 37 the second forum, in 2019.
Steve Yates, chair of the China Policy Initiative at the America First Policy Institute, a Washington-based think tank, said it’s important for the United States to work with its allies to compete with the CCP in key global regions.
“It’s not something for the United States to do alone, and the United States doesn’t do it in the hopes of imperialism or overly aggressive control of the countries that are targeted,” he told The Epoch Times.
“That is very different from the People’s Republic of China luring people into debt traps or other forms of disappointment with the Belt and Road Initiative. That’s why some major partners are exiting the Belt and Road: they’ve seen the results, and the results are not happy.”
A week after the BRI forum in Beijing, U.S. President Joe Biden referred to it in a speech at the White House.
“And I think that [Xi] is realizing that there are—for example, his Belt and Road Initiative—well, we’re going to compete on that. And we’re going to—we’re doing it a different way. The Belt and Road Initiative has been a debt and a noose for most of the people that signed on,” President Biden said on Oct. 25, 2023.
“We are working with our G7 partners to provide infrastructure for the very nations that he’s trying to deal with.”
In June 2022, the White House announced a partnership for global infrastructure and investment (PGI) established among the G7 countries to provide low- and middle-income countries with infrastructure financing.
The United States pledged to raise $200 billion in five years, and other G7 countries pledged $400 billion in the same timeframe.
At a meeting in the White House at the end of November 2023, President Biden and the president of Angola highlighted a $1 billion railway project that will connect the Democratic Republic of Congo and Zambia to the Lobito port in Angola.
President Biden called the “Lobito Corridor” project the “biggest U.S. rail investment in Africa ever.”
Mr. Yeh said the PGI program is a type of “global supply chain reshuffling investment agreement,” which will take several years to take shape.
The BRI framework has also started to attract attention from the U.S. Congress. The new bipartisan report released by the U.S. House Select Committee on the CCP has laid out a legislative agenda to counter the BRI globally.
Vietnam: A New Battleground
As China’s trade with the United States and Europe shrinks, the ASEAN region is the only bright spot. Among the 10 member states, Vietnam is the largest trade partner with China, accounting for a quarter of China’s trade with the bloc.
On his return from the G20 summit in India in September 2023, President Biden visited Vietnam, which has the world’s second-largest rare earth reserves. There, he signed a “comprehensive strategic partnership” with the Southeast Asian country.
Through its PGI, the U.S. alternative to China’s BRI, the United States might invest $1 billion in Vietnam-based projects.
In mid-December 2023, Xi also visited Vietnam to counter the United States’ influence. He urged the country to embrace the BRI and adopt his advocacy of a “community of shared destiny for mankind,” a phrase the Vietnamese official statement didn’t use.
Before Xi’s visit, the Chinese ambassador to Vietnam told Vietnamese state media that Beijing was willing to offer “free aid” for a high-speed rail from China’s Yunnan Province to the port city of Haiphong that runs through Vietnamese regions rich in rare earths.
The two countries signed an MOU on cross-border railways under the BRI framework but didn’t officially mention the Yunnan-Haiphong link.
Mr. Yeh said it’s very unlikely that Vietnam will want to completely heed China’s demand as a result of a state visit.
He said that most Asian countries will probably deal with China and the United States at the same time, trying to make the best of the U.S.–China competition.
“At the same time, they won’t choose the side of the United States before the U.S.–China relations reach a floor,” he said.
Regardless of how the CCP repackages its BRI, the next decade won’t go nearly as uncontested as the first.
Shi Ping contributed to this report.
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