Mark Williams
Dec 2, 20194 min
I’ve been writing a course on the evolution of the Chinese shipping industry over the last 40 years and its likely trajectory over the next 20 years, to be hosted by Lloyd’s Maritime Academy. It starts this week in case you’re interested. And if it tickles your fancy, here’s a webinar introducing the subject. Anyway, it’s impossible to write about such matters without considering the Belt and Road Initiative; a sneaky preview of some of the course content reveals that in some directions the BRI has been bumping into BRICK walls.
Some people think the BRI is a jolly marketing wheeze to artificially stimulate China’s neighbouring economies to the level where their middle classes can buy all the consumer goods that China’s ageing population won’t be buying in a few years’ time. Others think that the BRI is a sinister plan to lure unsuspecting frontier economies into debt servitude. Washington, D.C.-based thinktank, the Center for Global Development, identifies eight countries that may struggle with their debt repayments to China: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan.
Curiously they don’t include Sri Lanka, where the return of the Rajapaksa family to the Presidency has led to calls for another refinancing of their pet project, Hambantota port and free trade zone. Ajith Nivard Cabraal, a former central bank governor and an economic adviser to Prime Minister Mahinda Rajapaksa, said in a media interview, “The ideal situation would be to go back to status quo. We pay back the loan in due course in the way that we had originally agreed without any disturbance at all.”
More sympathetic observers agree with President Xi when he repeats his mantra of extensive consultation, joint contribution and shared benefits. Xi has spent 2020 globetrotting to spread his message. Last week he was in the Caribbean, singing from the BRI hymnsheet. The Ministry of Foreign Affairs of the People’s Republic of China published a press release quoting Xi as follows: “China and Latin American and Caribbean countries are developing countries and constitute an important part of international emerging forces. The Chinese side has always respected the right of Latin American people to choose their own development path and supported the process of Latin American integration and the handling of regional issues through dialogue and consultation. The great development of China-Latin America relations in recent years has brought tangible benefits to both sides and also contributed to promoting regional prosperity and stability. The Chinese side is willing to work with the Latin American side to advance the joint construction of the Belt and Road Initiative and promote China-Latin America cooperation for in-depth and practical development in line with the principles of equal treatment, mutual benefit and win-win results.”
But Chinese BRI developments are facing inertia and resistance in a number of countries. Take the ASEAN members for instance; a group of ten nations that China wants USD 1 Tn of trade with by 2020. Across ASEAN nations, elected politicians have been discussing their concern that BRI loans and funding should give equal benefits to Chinese and host country companies and peoples. This year alone, the Malaysian government has cancelled USD 3 Bn worth of BRI funded pipeline projects. Indonesian politicians want lower interest rates and more participation for Indonesian companies on projects like the Jakarta-Bandung railway. Thailand has wavered over the Kra Canal project for over a decade now. Cambodian industry associations complain about China’s overwhelming presence in Sihanoukville: “Investors from one country taking control of such large investments will have more negative effects than positive.” The Philippines, Vietnam and Malaysia continue to disagree with China over the nine-dash line which China says demarcates its national waters in the South China Sea. Earlier this year the Philippines, Vietnam and Malaysia banned a US-Chinese co-produced movie because in one scene a map appeared showing the nine-dash line.
China has taken a while to understand the push-back on the BRI, while consistently banging the same drum. At the 22nd China- ASEAN summit in Bangkok last month, Chinese Premier Li Keqiang called on ASEAN to speed up economic and trade cooperation and to quickly conclude negotiations to create a Regional Comprehensive Economic Partnership (RCEP) so as to lay the foundation for East Asia's economic integration, and the implementation of the China-ASEAN Free Trade Area Upgrade Protocol to “promote trade and investment liberalization and facilitation.”
The Take Away
One has the sense that China is slow to realise that it can’t pull the wool over peoples’ eyes with BRI. The Grand Projects of the BRI are demonstrably of benefit to Chinese investors, contractors, suppliers and labourers, and therefore assist China in its strategic aim to be first among nations by the middle of the current century. But for host countries to accept China’s presence as well as its largesse, China has to be seen as a partner, not to be an overweening or even a colonial power. This is especially the case in democracies, where public image and propaganda are still subject to uncensored critique and criticism in ways that China’s leadership is not accustomed to at home. Will the Chinese politburo learn the lesson, or will they eventually run into a brick wall?