JMD on SSRN: A China Wins Twice Proposition: The Belt and Road Initiative
A China Wins Twice Proposition: The Belt and Road Initiative
By James M. Dorsey
A podcast version of this story is available on Soundcloud, Itunes, Spotify, Stitcher, TuneIn and Tumblr
China’s dazzling infrastructure and energy-driven Belt and Road Initiative (BRI), a US$1 trillion investment across Eurasia and beyond, has lost its shine. Increasingly, China’s leveraging of the initiative is being perceived by a growing number of recipients and critics alike as a geopolitical power play, a tool to shape a new world order partly populated by autocrats and authoritarians, and progressively characterized by intrusive surveillance, potential debt traps, and perceived as a self-serving way to address domestic overcapacity.
As a result, China’s most immediate problem is a growing perception that its principle of win-win economic cooperation often amounts to little more than China wins twice, both economically and geopolitically. It is forcing China to focus in the short-term less on the Great Game—the rivalry with the United States and its allies for dominance in a swath of land stretching from the China Sea to Europe's Atlantic coast—and more on ensuring that it does not lose hard-won ground. Ironically, China’s immediate allies as well as rivals in efforts to maintain its status are not exclusively the United States, India or Japan, but also its newly assertive, geopolitically ambitious friends in the Gulf: Saudi Arabia, the United Arab Emirates, and Iran.
Nowhere is this truer than in Pakistan, which — with its Prime Minister Imran Khan and together with Malaysia and Myanmar — is leading the charge in resisting China’s approach to the Belt and Road and seeking to change its focus. A $45 billion-plus crown jewel of the Belt and Road, Pakistan is insisting that Chinese investment—in what both countries have dubbed the China-Pakistan Economic Corridor (CPEC)—shift from infrastructure and energy to agriculture, job creation, and the enabling of third-party investment, primarily from countries of the Gulf.
Fuelling Chinese concern, Saudi Arabia and the UAE have exploited Chinese irritation with Pakistan’s demands, as well as initial criticism of the crackdown on Turkic Muslims in the north-western province of Xinjiang, to their advantage. Massive aid and investment, to the tune of $30 billion in balance of payment support, deferred oil import payments and investment in the troubled Pakistani province of Balochistan, which borders Iran, has helped the Khan government to avoid approaching the International Monetary Fund (IMF) cap in hand to bail it out of an imminent financial crisis.
It also shielded China—which refrained from rushing to Pakistan’s financial aid—from potentially embarrassing disclosures of the financial terms of CPEC-related projects that the IMF was demanding as part of any bailout. Media reports said that Pakistan had told the IMF about having to pay China $40 billion over 20 years for $26.5 billion in Chinese funding of CPEC-related projects.
The official disclosures would have likely reinforced notions that the Belt and Road is less benign than China asserts. China worried, however, that greater Saudi and UAE influence in a restive region on Iran’s border—which could serve as a launchpad for possible efforts to destabilize the Islamic Republic—may complicate the security of its massive investment and suck the People’s Republic into the escalating maelstrom of Saudi-UAE-Iranian rivalry. China and Saudi Arabia were careful not to raise the issue of Pakistan during Saudi crown prince Mohammed bin Salman’s recent visit to Beijing that was designed to put on display ever closer cooperation and shore up Prince Mohammed’s image tarnished by the Yemen war and the killing of journalist Jamal Khashoggi.
Bolstered by Gulf support, Pakistan has put its money where its mouth is. In January, Pakistan asked China to shelve a joint $2 billion coal power project because of its expense. Pakistan planning and development minister Makhdoom Khusro Bakhtyar advised his Chinese counterpart that the 1,320-megawatt Rahim Yar Khan project was not a priority. The government was reportedly planning to slash hundreds more CPEC-related projects. Two Chinese companies that drafted a master plan to turn the strategic Baloch port of Gwadar into a smart city, meanwhile, complained to the government about delays in the project’s approval.
Pakistan was just the last, albeit most crucial, node on the Belt and Road to challenge China’s commercial and geopolitical approach. Malaysia has suspended or cancelled $26 billion in Chinese-funded projects. Speaking during a visit to Beijing, Malaysian Prime Minister Mahathir bin Mohmad warned the Chinese: “you don’t want a situation where there’s a new version of colonialism happening because poor countries are unable to compete with rich countries in terms of just open, free trade.” Mahathir was echoing his earlier assertion that “we gain nothing” from Chinese investment and risk selling off the country to foreigners.
At about the same time, Myanmar was negotiating a significant scaling back of a Chinese-funded port project on the Bay of Bengal from one that would cost $ 7.3 billion to a more modest development that would cost $1.3 billion, in a bid to avoid shouldering an unsustainable debt. Myanmar feared that the debt burden would ultimately force it to follow in Sri Lanka’s footsteps, with debt having left Sri Lanka with no choice but to hand over its strategically located Hambantota port to the Asian giant.
China was also pressuring Myanmar to revive the suspended $3.6 billion Myitsone dam project, which if built as previously designed would flood 600 square kilometres of forestland in northern Kachin state and export 90 percent of the power produced to China. In return, China reportedly offered to support Myanmar, which has been condemned by the United Nations, Western countries, and some Muslim nations for its repressive campaign against the Rohingya, some 700,000 of whom fled to Bangladesh last year.
Similarly, recent protests against the forced resettlement of eight Nepali villages persuaded China International Water and Electric Corporation (CWE), a subsidiary of China Three Gorges, to consider pulling out of a 750-megawatt hydropower project. CWE said it was looking at cancelling the project because it was “financially unfeasible.”
The Soup Barometer
Ambivalence toward China and its signature Belt and Road is perhaps most complex in Central Asia, where a heavy soup made of pulled noodles, meat, and vegetables symbolizes the region’s close cultural and ethnic ties with the People’s Republic’s repressed Turkic and Hui Muslims also explains growing Central Asian unease with China’s re-education campaign in Xinjiang and the Belt and Road. Named Ashlan Fu and introduced to Kyrgyzstan in the late nineteenth century by Dungans, exiled Chinese Hui Muslims who fled over the Tien Shan Mountains after a failed rebellion in 1877, the soup has become a staple of Kyrgyz cuisine.
Members of Kyrgyzstan’s far right Kyrk Choro (Forty Nights) group protested in December and January outside the Chinese embassy in the Kyrgyz capital of Bishkek against the inclusion of ethnic Kyrgyz in the up to one million Muslims detained in re-education camps in Xinjiang as part of the Chinese crackdown. In a sign of the times, Kyrk Choro, a nationalist group that has gained popularity and is believed to have the support of the Kyrgyz ministries of interior and labour, migration, and youth, and the National Security Committee (GKNB), focused its protest exclusively on ethnic Kyrgyz in Chinese detention.
Acting as vigilantes, Kyrk Choro raided clubs in Bishkek four years ago in a campaign against prostitution, accusing Chinese nationals of promoting vice. In a video of an attack on a karaoke club, a Kyrk Choro leader showed a receipt that featured a girl as one of the consumed iteYet, while standing up for the rights of ethnic Kyrgyz and Kyrgyz nationals, Kyrk Choro has also called for Uighurs, the Turkic Muslims that populate Xinjiang, to be booted out of Bishkek’s most popular clothing bazaar and replaced by ethnic Kyrgyz.
Kyrk Choro further demanded the expulsion of illegal Chinese migrants. It insisted that the government check the documents of migrants, including those who had obtained Kyrgyz citizenship over the last decade, among them 268 Chinese nationals who in majority were of Kyrgyz descent. Kyrk Choro’s contradictory demands and claims reflect not only a global trend towards ethnic and religious nationalism with undertones of xenophobia, but also concern that Belt and Road-related projects serve Chinese rather than Kyrgyz and Central Asian interests. The Kyrgyz government recently reported that 35,215 Chinese citizens had arrived in the country in 2018, many of them as construction workers on Chinese-funded projects.
Political scientist Colleen Wood noted that social media activists were linking criticism of Chinese commercial practices with China’s crackdown in Xinjiang. “One widely-shared image, which declares “Don’t let anyone take your land,” depicts a strong fist—adorned with a Kyrgyz flag—stopping a spindly hand—marked by a Chinese flag—from snatching factories and a field,” Wood wrote in The Diplomat. Wood said that some activists compared Chinese practice to the 2002 demarcation of the Chinese-Kyrgyz border during which the Central Asian nation handed over 1,250 square kilometres of land to China. Another Facebook page, Kytai baskynchylygyna karshybyz, which roughly translates to “we’re against Chinese aggression,” posted articles about Chinese mining companies operating in Kyrgyzstan, which are a target of Kyrgyz protesters, alongside articles depicting the intrusiveness of the crackdown in Xinjiang, according to Wood.
The Kyrgyz government, much like the vast majority of Muslim countries, has so far avoided taking China to task on its crackdown for fear of jeopardizing its relations with the People’s Republic. Kyrgyz President Sooronbay Jeenbekov insisted that “the ethnic Kyrgyz of China are citizens of China, who obey the laws of their country. How can we intervene in their domestic matters? We can’t.”
If Kazakhstan—where the issue of ethnic Kazakhs detained in China has flared up—is anything to go by, the Kyrgyz government is walking a tightrope. Kyrgyz national Asyla Alymkulova recently established the Committee to Protect the Kyrgyz People in China after her husband, Shairbek Doolotkhan, a Chinese-born Muslim, vanished in October during a business trip to Xinjiang. Doolotkhan’s company subsequently advised Alymkulova that her husband had been “sent away to study” in a camp. Short of a reunion with her husband, there is little that is likely to convince Alymkulova, or the relatives of thousands of other Central Asians, including up to 7,500 Kazakhs, that Chinese policy towards Muslims is benign and benefiting the community and the region’s progress.
That, in turn, will not make things easier for the Kyrgyz and other Muslim governments at a time when ethnic and cultural identities in a nationalistic and at times xenophobic environment are becoming prevalent. Kyrgyz attitudes towards Ashlan Fu may be the barometer. Anti-Chinese sentiment in Central Asia simmers at the surface, with Tajikistan having become the first Central Asian nation to be trapped in debt. As a result, Tajikistan was forced to cede control of some 1,158 square kilometres of disputed territory in exchange for having an undisclosed amount of Chinese debt written off.
Scholars of international relations Robert Daly and Matthew Rojanski noted on a recent trip to Russia, Kazakhstan, and China that was intended to gauge responses to the Belt and Road that Eurasian nations were eager to benefit from Chinese investment, but wary of Beijing’s intentions. “We found an eagerness to participate in projects that support national development, but deep resistance to any westward or northward expansion of China’s practices, ideas, or population […] Neither (Russia or Kazakhstan) hope that China’s power will increase with its investments,” the scholars said.
Matching Words with Deeds
Debt has been a focal point of criticism of the Belt and Road. It has allowed China to fly under the radar on other controversial issues, such as its support for the kind of dirty-power projects in Central and South Asia and Africa, which the People’s Republic has banned at home because of the increased cost of carbon pricing and air pollution regulations associated with coal-fired power plants. “BRI has the potential to transform economies in China’s partner countries. Yet it could also tip the world into catastrophic climate change,” warned China environment expert Isabel Hilton, noting that coal-driven power was long at the heart of China’s economic development. “The more than 70 countries that are signed up to BRI (Belt and Road Initiative) have an average GDP of around one-third of that of China. If they adopt China’s development model, which resulted in a doubling of China’s greenhouse gas emissions in the first decade of the century, it would make the emissions targets in the Paris Agreement impossible,” added climate change scholar Nicholas Stern.
Chinese President Xi Jinping has capitalized on the American withdrawal from the Paris Agreement—the landmark United Nations Framework Convention on Climate Change on greenhouse-gas-emissions mitigation, adaptation, and finance—by projecting China as a leader in environmental good governance. In 2016, Xi called for a “green, healthy, intelligent, and peaceful” Belt and Road. He urged participating countries to “deepen cooperation in environmental protection, intensify ecological preservation and build a green Silk Road.” On paper, Chinese environmental good governance looks good. The problem is that the government’s guidelines are non-binding and often ignored. As a result, Xi has yet to back up words with deeds. China is developing some 240 coal projects with a total generating capacity of 251 gigawatts in 25 countries that include developments in Bangladesh, Pakistan, Kenya, Ghana, Malawi, and Zimbabwe, and is also funding new coal capacity in Egypt, Tanzania, and Zambia. Many of those projects do not incorporate carbon capture technology that would align them with global efforts to control climate change.
Chinese financial institutions are the world’s largest financier of overseas coal plants, investing $15 billion in coal projects from 2013 to 2016 through international development funds, with another $13 billion in proposed funding […] Chinese firms are involved in the construction, ownership, or financing of at least 16 percent of all coal-fired power stations under development outside China, according to a report published by environmental advocacy groups CoalSwarm, Sierra Club, and Greenpeace. Huang Wei, a climate and energy campaigner at Greenpeace East Asia, warned that Chinese banks’ and companies’ investments in coal abroad are a cause of major concern because of their potential to lock in more climate warming emissions in our carbon-constrained world […] If China wants to enhance its leadership on climate and ‘ecological civilization,’ Chinese companies’ and banks’ investment must steer away from coal towards renewable alternatives, such as wind and solar.”
Hilton notes that the heavy price China paid for its coal addiction in water scarcity, acid rain, and air pollution, coupled with the country’s gradual shift from an industry to a services-based economy, has forced it to create ecological safeguards and emphasize clean, green energy. The problem, Hilton said, is that “while China is making commendable efforts to clean up at home and reduce its carbon emissions, the Belt and Road Initiative threatens to lock China’s partners into the same high-emission development that China is now trying to exit.” Symptomatic of the China-centric focus of the Belt and Road, China’s push for dirty energy beyond its own borders is a bid to support its coal and energy companies that faced a bleak future because of reform at home that emphasized renewable energy instead of coal.
Quoting energy and environmental scholar Kelly Sims Gallagher, Hilton said that more than half of 50 Chinese-financed, coal-fired power plants constructed overseas between 2001 and 2016 used low-efficiency, sub-critical coal technology. Together, the plants were expected to release nearly 600 million metric tons of carbon dioxide a year, equivalent to 11 percent of total American emissions in 2015. Hilton said that by building new coal plants along the Belt and Road, “China is creating […] risks for the countries that host these projects, risks most of them can ill afford. If these new coal plants continue to operate, they will they make it much more difficult for poor countries to meet their climate goals under the Paris Agreement, and, far from offering a cheap energy option, they will become a financial burden either to the governments or consumers, even as these plants lock out cheaper and cleaner alternatives.”
On the Defensive
A series of reports by Western think-tanks, coupled with official American warnings of the pitfalls of the Belt and Road, have added to China’s woes, contributed to the People’s Republic being put on the defensive. They have added to the domestic debate in China itself. Xi’s pledge last year of US$60 billion in new loans to Africa triggered a wave of grumbling in a sign of mounting popular hostility to his international ambitions, and to the tightening of political controls at home. One blogger asserted that the money would be sufficient to fund China’s cash-strapped education ministry for three years. The critical comments on social media were quickly deleted.
All of this has not stopped the drumbeat of criticism from outside of China. China “is not in it to help countries out, they’re in it to grab their assets,” warned Ray Washburne, president and CEO of the Overseas Private Investment Corporation (OPIC), an intergovernmental agency that channels American private capital into overseas development projects. He accused China of intentionally plunging recipient countries into debt, then going after “their rare earths and minerals and things like that as collateral for their loans.”
That view persuaded Greenland, helped along by US pressure, to select a Danish rather than a Chinese company to build and upgrade three airports. “The big fear is that even a small Chinese investment will amount to a large part of Greenland’s GDP, giving China an outsized influence that can be used for other purposes,” said Danish foreign and defense policy scholar Jon Rahbek-Clemmensen.
A study by the Washington-based Center for Strategic and International Studies (CSIS) argued that the Belt and Road was driven by “interest groups within and outside China (that) are skewing President Xi’s signature foreign policy vision.” The study asserted that the positioning of the initiative persuaded Chinese local and regional authorities, as well as companies, to brand their activities as Belt and Road-related in order to gain economic and political advantage.
The similarly Washington-based Center for Global Development warned that 23 of 68 countries benefiting from Belt and Road investments were “significantly or highly vulnerable to debt distress.” The centre said eight of 23 vulnerable countries—Pakistan, Tajikistan, Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, and Montenegro—were particularly at risk. Djibouti already owes 82 percent of its foreign debt to China, while China is expected to account for 71 percent of Kyrgyz debt as Belt and Road-related projects are implemented. “There is […] concern that debt problems will create an unfavouable degree of dependency on China as a creditor. Increasing debt, and China’s role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI countries,” the report said.
Rex Tillerson, a former American secretary of state, echoed the centre’s concerns during a visit to Africa while still in office in March 2018. China “encourages dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-sustaining growth. Chinese investment does have the potential to address Africa’s infrastructure gap, but its approach has led to mounting debt and few, if any, jobs in most countries,” Tillerson said.
Raising the Stakes
The Belt and Road’s geopolitics are a double-edged sword. Geopolitics is what many believe is its driver. Yet, geopolitics is also its potential Achilles Heel. The arrival in mid-December of the USS John C. Stennis aircraft carrier group in the Gulf had on the surface nothing to do with the Belt and Road and everything to do with American efforts to increase pressure on Iran. Yet, Pakistan’s mounting dependence on Saudi Arabia and the UAE, coupled with the American campaign intended to curb Iran’s regional projection, increasingly raises the stakes for China beyond the Trump administration’s efforts to force China and others to comply with its tough economic sanctions against the Islamic Republic.
The carrier group’s presence in the Gulf, the first by an American aircraft carrier in eight months, raised the spectre of a potential military conflagration on Balochistan’s doorstep. It coincided with a suicide attack on an Islamic Revolutionary Guard Corps headquarters in the Indian-backed Iranian port city of Chabahar, a mere 70 kilometres up the coast from the Chinese-backed port of Gwadar, which killed two people and left 40 wounded. The attack raised the spectre of Saudi and/or American covert support for militants in Iran, a key node in the Belt and Road’s land link to Europe.
Saudi and Iranian media reported that Ansar al-Furqan—a shadowy Iranian Sunni jihadi group which Iran asserts is supported by Saudi Arabia, along with the United States and Israel—had claimed responsibility for the attack. Saudi-based pan-Arab daily Asharq Al-Awsat suggested that the attack “reflects the anger harboured by the (city’s Baloch) minority against the government.” The paper said the Iranian government had expelled thousands of Baloch families from Chabahar and replaced them with Persians, in a bid to change the city’s demography. It asserted that Iran was granting nationality to Afghan Shiites who had fought in Syria and Iraq and was moving them to Chabahar. The paper went on to say that “anti-regime Baloch movements have recently intensified their operations against Tehran in an attempt to deter it from carrying out its plan to expel and marginalize the Baloch from their ancestral regions.”
The Saudi media reports stroked with staunch Saudi support for Washington’s confrontational approach toward Iran. Pakistani militants say the kingdom has pumped large amounts of money into militant, ultraconservative Sunni Muslim, anti-Shiite, and anti-Iranian religious seminaries along the border separating Balochistan from the Iranian province of Sistan and Baluchestan, which is home to Chabahar. The funding was designed to create the building blocks for a potential covert effort to destabilize Iran by stirring unrest among its ethnic minorities.
Moreover, Saudi think-tank the Arabian Gulf Centre for Iranian Studies (AGCIS), renamed the International Institute of Iranian Studies and believed to be backed by Prince Mohammed, argued in a study that Chabahar posed “a direct threat to the Arab Gulf states” that called for “immediate counter measures.” Written by Mohammed Hassan Husseinbor, identified as an Iranian political researcher, the study warned that Chabahar posed a threat because it would enable Iran to increase its market share in India for its oil exports at the expense of Saudi Arabia, raise foreign investment in the Islamic republic, increase government revenues, and allow Iran to project power in the Gulf and the Indian Ocean.
Noting the vast expanses of Iran’s Sistan and Baluchestan province, Husseinbor went on to say that “it would be a formidable challenge, if not impossible, for the Iranian government to protect such long distances and secure Chabahar in the face of widespread Baluch opposition, particularly if this opposition is supported by Iran’s regional adversaries and world powers.”
Neo-Colonialism in the Twenty-First Century
The Pakistani government’s insistence on refocusing CPEC amounts to far more than a commercial and economic reorientation of Chinese investment. It challenges the core of the Belt and Road, at least as it relates to Pakistan, in terms of what some critics have termed a neo-colonial approach. It also casts a shadow over China’s hope that economic development in Xinjiang fuelled by linking the province to its neighbours will help it achieve the sinicizing of Turkic Muslims.
A leaked plan for CPEC detailed not only benefits that China would derive from its investment in Pakistan, but the way Pakistan would be turned, even more than it already is, into a surveillance state in which freedoms of expression and media are manipulated. It also suggested the degree to which the Belt and Road was designed to establish China as Eurasia’s dominant power based on economics, as well as the adoption of measures that undermine democracy or inhibit political transition in autocracies.
The plan appeared to position Pakistan as a raw materials supplier for China, an export market for Chinese products and labour, and an experimental ground for the export of the surveillance state China is rolling out in Xinjiang. It envisioned Chinese state-owned companies leasing thousands of hectares of agricultural land to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology.
Chinese agricultural companies would be offered “free capital and loans” from various Chinese ministries, as well as the China Development Bank. It projected that the Xinjiang Production and Construction Corps would introduce mechanization and new technologies to Pakistani livestock breeding, development of hybrid varieties, and precision irrigation. Pakistan would effectively become a raw materials supplier rather than an added-value producer, a prerequisite for a sustainable textiles industry.
The plan further saw the Pakistani textile sector as a supplier of materials like yarn and coarse cloth to textile manufacturers in Xinjiang. “China can make the most of the Pakistani market in cheap raw materials to develop the textiles and garments industry and help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said. Chinese companies would be offered preferential treatment with regard to “land, tax, logistics, and services,” as well as “enterprise income tax, tariff reduction, and exemption and sales tax rate” incentives.
In other economic sectors, such as household appliances, telecommunications and mining, Chinese companies would exploit their presence to expand market share. In areas like cement, building materials, fertilizer and agricultural technologies, the plan called for the building of infrastructure and the developing of a policy environment to facilitate the entry of Chinese companies.
A full system of monitoring and surveillance would be built in Pakistani cities to ensure law and order. The system would involve the deployment of explosive detectors and scanners to “cover major roads, case-prone areas and crowded places […] in urban areas to conduct real-time monitoring and 24-hour video recording.”
A national fibre optic backbone would be built for internet traffic, as well as the terrestrial distribution of broadcast media that would cooperate with their Chinese counterparts in the “dissemination of Chinese culture.” The plan described the backbone as a “cultural transmission carrier” that would serve to “further enhance mutual understanding between the two peoples and the traditional friendship between the two countries.”
The plan identified as risks to CPEC “Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention,” as well as security. “The security situation is the worst in recent years,” the plan said. Its solution is stepped up surveillance rather than policies targeting root causes and appears to question the vibrancy of a system in which competition between parties and interest groups is the name of the game.
The risks have been driven home in attacks on Chinese targets and rejection of CPEC by Baloch nationalists who have seen little benefit to resource-rich, sparsely populated Balochistan itself, and fear that Chinese economic dominance will render the achievement of their rights even more difficult.
“This conspiratorial plan (CPEC) is not acceptable to the Baloch people under any circumstances. Baloch independence movements have made it clear several times that they will not abandon their people’s future in the name of development projects or even democracy,” said Baloch Liberation Army spokesman Jeander Baloch. In the latest incident, in November 2018, three Baloch Liberation Army suicide bombers launched a brazen assault on the Chinese consulate in Karachi.
According to Financial Times columnist Jamil Anderlini: “China is at risk of inadvertently embarking on its own colonial adventure in Pakistan—the biggest recipient of Belt and Road investment and once the East India Company’s old stamping ground… Pakistan is now virtually a client state of China. Many within the country worry openly that its reliance on Beijing is already turning it into a colony of its huge neighbor. The risks that the relationship could turn problematic are greatly increased by Beijing’s ignorance of how China is perceived abroad and its reluctance to study history through a non-ideological lens [...] It is easy to envisage a scenario in which militant attacks on Chinese projects overwhelm the Pakistani military and China decides to openly deploy the People’s Liberation Army to protect its people and assets. That is how ‘win-win’ investment projects can quickly become the foundations of empire.”
History Repeats Itself
In an ironic twist, China’s taking control of critical national infrastructure in countries trapped by Chinese debt amounts to the People’s Republic adopting the same approach that it feels lies at the core of its humiliation in the nineteenth century. “China is replicating the practices used against it in the European-colonial period, which began with the 1839-1860 Opium Wars and ended with the 1949 communist takeover—a period that China bitterly refers to as its ‘century of humiliation,’” said Indian strategist Brahma Chellaney.
Chellaney argues that, just as European imperial powers employed gunboat diplomacy to open new markets and colonial outposts, “China uses sovereign debt to bend other states to its will, without having to fire a single shot. Like the opium the British exported to China, the easy loans China offers are addictive. And, because China chooses its projects according to their long-term strategic value, they may yield short-term returns that are insufficient for countries to repay their debts. This gives China added leverage, which it can use, say, to force borrowers to swap debt for equity, thereby expanding China’s global footprint by trapping a growing number of countries in debt servitude.”
The Indian strategist noted that the terms for a 99-year lease of the Sri Lankan port of Hambantota, which the government was forced to accept as part of a restructuring of its debt, resemble those European powers imposed for the lease of Chinese ports like Hong Kong, or its lease of Australia’s deep-water port of Darwin. Kenya’s crushing debt to China threatens to turn its busy port of Mombasa—the gateway to East Africa—into another Hambantota.
Chellaney said that “these experiences should serve as a warning that the Belt and Road is essentially an imperial project that aims to bring to fruition the mythical Middle Kingdom. States caught in debt bondage to China risk losing both their most valuable natural assets and their very sovereignty. The new imperial giant’s velvet glove cloaks an iron fist—one with the strength to squeeze the vitality out of smaller countries.”
China’s supposed obliviousness to the potential impact on recipients, and the standing of its own economic, commercial, and geopolitical approach appears to be rooted in President Xi Jinping’s rewriting of history and reality spin that threatens to become a self-fulfilling prophecy. Launching the Belt and Road Initiative in a speech in Kazakhstan in September 2013, Xi suggested that the initiative constituted a revival of China’s centuries-old relationship with Eurasia. More than 2,100 years ago […] (Chinese) imperial envoy Zhang Qian was sent to Central Asia twice to open the door to friendly contacts between China and Central Asian countries, as well as the transcontinental Silk Road linking East and West,” Xi told his audience. In Indonesia a month later, Xi reminded the country’s parliament that “Southeast Asia has since ancient times been an important hub along the ancient Maritime Silk Road.”
Scholars Daly and Rojanski noted that the historic Silk Road was never centered on China, and that it served both commercial and military purposes. “The term ‘Silk Road’ was coined in 1877 by a German geographer to connote the historic phenomenon of Eurasian trade rather than a particular route,” the scholars said. They suggested that Eurasian nations had not forgotten that historically Chinese expansion westwards had often been violent,” a fact that Xi chose to overlook in his projection of the Belt and Road. It was, moreover, not immediately clear “that China’s branding, cash, and ambition can overcome the uneven development, political and cultural diversity, age-old hatreds, and daunting geography” of the Belt and Road, Daly and Rojansky said.
Xi’s projection of a China-centric world is reflected in the country’s media, which position the Belt and Road as a vehicle to cement China’s place in the world, as well as that of Communist Party rule, despite paying lip service to the principle of a win-win proposition. Chinese ambitions are further evident in its efforts to internationalize its currency, the renminbi, as well as the inclusion of elements of the Chinese surveillance state and the propagation of Chinese culture through local media in investment-target countries. They are also apparent in the creation of special Chinese courts to adjudicate Belt and Road disputes. Moreover, China announced the establishment of a new agency to coordinate its foreign aid program in 2018. The agency is part of an effort to project China’s global influence more effectively, and to increase Communist Party control.
Taking issue with the Chinese approach, the Center for Global Development suggested that China and recipients of Beijing’s largess would be better served if the People’s Republic adopted a multilateral approach to Belt and Road-related funding rather than insisting on doing it alone. Scott Morris, a former U.S. Treasury official and co-author of the centre’s report, said: “the way forward demands a clear policy framework aligned with global standards, something that has been absent from China’s lending practices to date. Whether Chinese officials have the will to pursue this approach will be critical in determining the ultimate success or failure” of the Belt and Road.
Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and co-host of the New Books in Middle Eastern Studies podcast. James is the author of The Turbulent World of Middle East Soccer blog, a book with the same title and a co-authored volume, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa as well as Shifting Sands, Essays on Sports and Politics in the Middle East and North Africa and recently published China and the Middle East: Venturing into the Maelstrom
 James Kynge, China’s Belt and Road projects drive overseas debt fears, Financial Times, 8 August 2018, https://www.ft.com/content/e7a08b54-9554-11e8-b747-fb1e803ee64e  Kirsty Needham, Malaysia cancels Belt and Road projects with China over bankruptcy fears, The Sydney Morning Herald, 21 August 2018, https://www.smh.com.au/world/asia/china-malaysia-agree-to-mutual-respect-amid-belt-and-road-tensions-20180820-p4zyo3.html  Jon Emont and Myo Myo, Chinese-Funded Port Gives Myanmar a Sinking Feeling, The Wall Street Journal, 15 August 2018, https://www.wsj.com/articles/chinese-funded-port-gives-myanmar-a-sinking-feeling-1534325404  Syed Irfan Raza, CPEC focus must be on job creation, agriculture: Imran, Dawn, 9 October 2018, https://www.dawn.com/news/1437770/cpec-focus-must-be-on-job-creation-agriculture-imran  Saeed Shah, Pakistan Turns to Gulf Countries to Keep Economy Afloat, The Wall Street Journal, 22 January 2019, https://www.wsj.com/articles/pakistan-turns-to-gulf-countries-to-keep-economy-afloat-11548160203  Mehreen Zahra-Malik, ‘No urgency’ for Pakistan to enter IMF program: Finance minister, Arab News, 14 December 2018, http://www.arabnews.com/node/1420756/world  Ali Salman Andani, All-weather friend? Pakistan falls into China’s debt trap, Asia Times, 11 January 2019, V http://www.atimes.com/all-weather-friend-pakistan-falls-into-chinas-debt-trap/?utm_source=The+Daily+Report&utm_campaign=3759569bec-EMAIL_CAMPAIGN_2019_01_11_01_08&utm_medium=email&utm_term=0_1f8bca137f-3759569bec-31513393  Adnan Aamir, Saudi investment in Pakistan stokes tensions with China, Asia Nikkei, 28 January 2019, https://asia.nikkei.com/Politics/International-Relations/Saudi-investment-in-Pakistan-stokes-tensions-with-China  James M. Dorsey, Saudi Crown Prince Mohammed bin Salman must walk geopolitical tightrope during Asian tour, South China Morning Post, 18 February 2019, https://www.scmp.com/week-asia/opinion/article/2186570/saudi-crown-prince-mohammed-bin-salman-must-walk-geopolitical  Haroon Janjua, Cash-strapped Pakistan asks China to shelve US$2 billion coal plant, South China Morning Post, 16 January 2019, https://www.scmp.com/week-asia/geopolitics/article/2182326/cash-strapped-pakistan-asks-china-shelve-us2-billion-coal  Behram Baloch, Chinese firms concerned over Gwadar Master Plan approval delay, Dawn, 21 January 2019, https://www.dawn.com/news/1458803/chinese-firms-concerned-over-gwadar-master-plan-approval-delay  Hannah Beech, ‘ We Cannot Afford This ’: Malaysia Pushes Back Against China’s Vision, The New York Times, 20 August 2018, https://www.nytimes.com/2018/08/20/world/asia/china-malaysia.html  Bloomberg, Mahathir Warns Against New ‘Colonialism’ During Visit to China, 20 August 2018, https://www.bloomberg.com/news/articles/2018-08-20/mahathir-warns-against-new-colonialism-during-visit-to-china  Gordon Fairclough and Uditha Jayasinghe, Sri Lanka to Sell 80% Stake in Strategically Placed Harbor to Chinese, The Wall Street Journal, 30 August 2016, https://www.wsj.com/articles/sri-lanka-to-sell-80-stake-in-strategically-placed-harbor-to-chinese-1481226344?mod=article_inline  Ibid. Emont and Myo, Chinese-Funded Port Gives Myanmar a Sinking Feeling  Yubaraj Ghimre, China Eyes Exit, Nepal’s West Seti Hydropower Project in Jeopardy, South China Morning Post, 30 August 2018, https://www.scmp.com/week-asia/geopolitics/article/2161968/nepals-west-seti-hydropower-project-jeopardy-china-eyes-exit  Richard Collett, How Muslim-Chinese Food Became a Culinary Star in Kyrgyzstan, Gastro Obscura, 18 December 2018, https://www.atlasobscura.com/articles/what-to-eat-kyrgyzstan  Radio Free Europe/Radio Liberty, Bishkek Protesters Rally Outside Chinese Embassy Against 'Reeducation Camps,' 20 December 2018, https://www.rferl.org/a/bishkek-protesters-rally-outside-chinese-embassy-against-reeducation-camps-/29667706.html  Anna Lelik, Kyrgyzstan: Nationalist Vice Squad Stirs Controversy, eurasianet, 10 February 2015, https://eurasianet.org/kyrgyzstan-nationalist-vice-squad-stirs-controversy  Radio Azattik, Government: From 2010 to 2018, more than 260 Chinese citizens acquired Kyrgyz citizenship (Правительство: С 2010 по 2018 год гражданство Кыргызстана получили более 260 жителей Китая), 18 December 2018, https://rus.azattyk.org/a/29662156.html  Colleen Wood, Why Did Kyrgyz Stage a Protest Outside the Chinese Embassy? The Diplomat, 29 December 2018, https://thediplomat.com/2018/12/why-did-kyrgyz-stage-a-protest-outside-the-chinese-embassy/  Radio Azattik, Jeenbekov on Chinese Kyrgyz: These are Chinese citizens, we cannot interfere (Жээнбеков о китайских кыргызах: Это граждане Китая, мы не можем вмешиваться), 19 December 2018, https://rus.azattyk.org/a/29664421.html  AsiaNews.it, Kyrgyz and Kazakhs detained with Uyghurs in Xinjiang, activists say, 19 December 2018, http://www.asianews.it/news-en/Kyrgyz-and-Kazakhs-detained-with-Uyghurs-in-Xinjiang,-activists-say-45787.html  Bakhtiyor Atovulloev, Takiistan is turning into the new province of China, Eurasia News, 30 December 2016, https://tajikopposition.com/2016/12/30/tajikistan-is-turning-into-the-new-province-of-china-eurasianews/  Robert Daly and Matthew Rojanski, China’s Global Dreams Give Its Neighbors Nightmares, Foreign Policy, 12 March 2018, https://foreignpolicy.com/2018/03/12/chinas-global-dreams-are-giving-its-neighbors-nightmares/  Isabel Hilton, How China’s Big Overseas Initiative Threatens Global Climate Progress, Yale Environment 360, 3 January 2019, https://e360.yale.edu/features/how-chinas-big-overseas-initiative-threatens-climate-progress  China Daily, Xi calls for building 'green, healthy, intelligent and peaceful' Silk Road, 22 June 2016, http://www.chinadaily.com.cn/world/2016xivisitee/2016-06/22/content_25812410.htm  Feng Hao, China’s Belt and Road Initiative still pushing coal, chinadialogue, 12 May 2017, https://www.chinadialogue.net/article/show/single/en/9785-China-s-Belt-and-Road-Initiative-still-pushing-coal  Christine Shearer, Neha Mathew-Shah, Lauri Myllyvirta, Aiqun Yu, and Ted Nace, Boom and Bust 2018, Tracking the Global Coal Plant Pipeline, Coalswarm, Sierra Club and Greenpeace, March 2018, https://endcoal.org/wp-content/uploads/2018/03/BoomAndBust_2018_r4.pdf  Huileng Tan, China is massively betting on coal outside its borders — even as investment falls globally, CNBC, 6 April 2018, https://www.cnbc.com/2018/04/06/china-is-massively-betting-on-coal-outside-its-shores--even-as-investment-falls-globally.html  Ibid. Hilton  Ibid. Hilton  Robyn Dixon, China has spent billions in Africa, but some critics at home question why, Los Angeles Times, 3 September 2018, https://www.latimes.com/world/la-fg-china-africa-20180903-story.html  Owen Churchill, China hasn't changed belt and road's 'predatory overseas investment model', US official says, South China Morning Post, 13 September 2018, https://www.scmp.com/news/china/diplomacy/article/2163972/china-hasnt-changed-belt-and-roads-predatory-overseas  Aaron Mehta, How a potential Chinese-built airport in Greenland could be risky for a vital US Air Force base, Defense News, 7 September 2018, https://www.defensenews.com/global/europe/2018/09/07/how-a-potential-chinese-built-airport-in-greenland-could-be-risky-for-a-vital-us-air-force-base/  Jonathan Hillman, China's Belt and Road Is Full of Holes, CSIS Briefs, September 2018, https://csis-prod.s3.amazonaws.com/s3fs-public/publication/180905_Hillman_ChinasBelt_FINAL.pdf?uhtZC7Pbw2UjbwtitdOXmexJDWjVWfyr  John Hurley, Scott Morris, and Gailyn Portelance, Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective, Center for Global Development, March 2018, https://www.cgdev.org/sites/default/files/examining-debt-implications-belt-and-road-initiative-policy-perspective.pdf  U.S. Embassy in Senegal, Secretary of State Rex W. Tillerson Remarks – U.S.-Africa Relations: A New Framework, George Mason University March 6, 2018, 6 March 2018, https://sn.usembassy.gov/secretary-state-rex-w-tillerson-remarks-george-mason-university-march-6-2018/  Nancy A. Youssef, U.S. Sends Aircraft Carrier to Persian Gulf in Show of Force Against Iran, The Wall Street Journal, 3 December 2018, https://www.wsj.com/articles/u-s-sends-aircraft-carrier-to-persian-gulf-in-show-of-force-against-iran-1543871934  Bourse & Bazaar, When the Sun Sets in the EastNew Dynamics in China-Iran Trade Under Sanctions, January 2019, https://static1.squarespace.com/static/