Chinese's BRI: A Threat to the Nations' Sovereignty

Debt trap diplomacy

The success of any scheme depends on its financing. This applies more to the infrastructure projects. When the Belt Road project was first started, all the financing was done by the Chinese government, China centric Asian Infrastructure Investment Bank and other Chinese institutions.

Now China is moving towards a new type of financial management, in which they talk of 'Third Party Co-Operation', in which the burden of investment will be borne by more than one country. But it must be understood that this change in Chinese stand was not without any reason. In fact, due to investment in infrastructure by the Chinese government itself or by the financial institutions under the Chinese government in China's financial system, many countries have been trapped into debt trap. Sri Lanka became the first victim of the same. It is worth noting that due to the unbearable burden of loan a few years ago, Sri Lanka had to give their Hambantota port on a 99-year lease to China. Looking at the recent Sri Lanka's experience, many countries have started distancing from China's infrastructure proposals. Similarly in these circumstances, the Djibouti port (Africa) is also on the verge of being handed over to China.

With worsening debt trap of the poor countries, BRI's opposition is also mounting. In the last few years, not only the opposition parties in the BRI partner countries but also the social organisations have been vehemently opposing the BRI. Many countries are also reviewing BRI's infrastructure projects with renewed scrutiny. Hambantota has become a 'new caution story'. Malaysia reduced the size of the rail project costing nearly a billion dollars. The project cost has also been reduced in Maldives, Ethiopia and Pakistan. Significantly, Malaysia's Prime Minister Mohathir Mohammed had dismissed many infrastructure projects funded by China before it was abrogated, by saying that his country does not support such kind of borrowing and even said that China will bring new kind of colonialism. Similarly, due to the projects being made by China, Ethiopia suffers from huge debt crisis and has postponed the re-payment of the $ 4 billion rail project by 20 years ahead. Critics in Zambia also say that under the pressure of Zambian debt, China will control its state properties. Pakistan's balance of payment is increasingly widening due to the China-Pakistan Economic Corridor (CPEC) being built at a cost of $62 billion. Wherever China's companies are building infrastructure projects, there is a growing concern in those countries due to their unbearable debt, that China is exploiting these countries by leveraging their resources and colonisation is increasing in true way. These problems being faced towards the implementation of the plan, forced China to change its entire strategy. One Chinese think-tank has asked Chinese enterprises to change their strategy with respect to BRI.

This attitude of China on infrastructure issues is being called 'debt trap diplomacy' across the world. All the countries around the global, whom China is approaching with infrastructure plans, are looking at these proposals with doubts linking the same with the experience of the countries falling into debt trap, and the resulting experience of parting with the strategic national resources, such as Hambantota port of Sri Lanka. It's important to know that the proposal of the Humbantota port was not financially sound, because it is known to be world's least busy ports. Because of this, revenue from the port was much less compared to the interest on the amount spent on the development of the port. As a result Sri Lanka had to part with the port and cede it to China on long lease. Experts believe that this port is strategically important for China, as China was able to increase its presence in the Indian ocean by occupying this port.

While analyzing the expenditure on China's infrastructure projects, an organization called Centre for Global Development, has concluded that due to this increasing debt, the economic condition of eight countries will be miserable. A research institute named Centre for Global Development says that due to such kind of debt, the eight countries, that are approaching a very critical condition, are Djibouti, Kirgizstan, Laos, Maldives, Mongolia, Montenegro, Pakistan and Tajikistan. Research Institute says that China has failed to make use of efficient methods adopted by other international institutions in reference to this kind of loan. Many times, China waived debt, while many times the area and property have been snatched from debtor countries.

Grande bee institution a 'Think Tank', which is an advisory research institute of the Chinese Government, released a report in April 2019 which states that China's enterprises which are associated with BRI-related port projects are battling with problems today. It has been stated in the report that there are serious drawbacks in the professional evaluation of the projects. At the same time, there are serious issues in debt patterns. With the lack of transparency of information, there is also a complete lack of evaluation of the impact of these projects on the society and culture in the region.

Although the Chinese think tank itself is pointing to serious shortcomings in this context, the Chinese government has repeatedly said that international media is spreading misleading information about BRI. This is the reason why China is reconsidering the measures to disseminate information about BRI for the international world.

While China is saying that the global media is spreading misconceptions about BRI, on the other hand, due to China's debt trap diplomacy, USA, Japan, Germany, Russia and Australia have expressed dissatisfaction over the economic and political impact on BRI countries. EU countries had gathered last year and accused China of breaching free trade and giving unfair benefits to Chinese enterprises. After Italy agreeing to several BRI projects, many European countries are extremely unhappy. Significantly, Italy has made 29 agreements with China, with an investment of $ 2.5 billion and working closely with China regarding infrastructure especially Italy's ports, transport and logistics. 13 countries of the European Union are already part of BRI, but Italy is a major European power, which has sent a serious blow to western leaders opposing China's advances. Chinese companies are also no less culprit.

While on the one hand, through the development of infrastructure and through its blatant aggression of promoting trade, the Chinese government's strategy of trapping the poorer countries in its debt trap is being taken seriously; role of Chinese companies is no less dubious. Some people believe that both Chinese government and Chinese companies are exploiting poor countries in the name of building infrastructure. But some people believe that not Chinese government, but only China companies are culprit.

If we talk of Chinese companies engaged in infrastructure, then it is found that they are motivated by maximising profits. At the same time, due to government's control, they also have huge amounts of bureaucratic interferences, inefficiencies and negligence. They lure poor countries into the greed of cheap borrowing and also lure them to take projects that are not economically viable. They also give the officials of the respective countries a wrong opinion about the sustainability and benefit of those projects. Many times, governments come under their hoax and sign even non-subsidized loans, which are impossible to repay. It can be said that although Chinese companies are also culprits to a large extent in trapping the countries into debt trap, in spite of this, the Chinese government cannot be relieved from the charge, deliberately blaming the construction of infrastructure, the poor countries being implicated in debt trap and their resources are being captured. But whether Chinese companies are guilty or the Chinese government's nefarious diplomacy, the loss is only for the poor countries.