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

BRI is China Centric

China doesn't concede that BRI is a strategic plan and calls it an 'initiative' and is therefore encouraging countries to come forward to build infrastructure in their respective countries with China's initiative, and help themselves grow their trade and therefore GDP. This may also improve movement of people and help cultural exchange. China says that BRI will help people living in these countries, especially poor countries, to improve their living standards and they will become part of global trade. However, if we try to analyse deeply we find that all these plans are China centric. Firstly, we must understand that China has huge foreign exchange reserves, and China has been searching for new grazing grounds to invest and get better returns from this pile up of foreign exchange reserves. Secondly we need to understand that Chinese economy has been receding for many years, firstly due to global recession and lately due to beginning of trade war by USA under Donald Trump. Under the circumstances first endeavour of the Chinese government is to fetch new business for its companies, especially infrastructure companies. Most of the contracts for BRI projects have gone to Chinese companies only. These companies are generally under the ownership of Chinese government. Further, China is destined to gain from improved connectivity due to BRI projects, because its trade with US is going down due to trade war and it wants to compensate the same by increasing its trade with other countries.

In this context many experts believe that this is being carried out under China's well thought of strategy. It's believed that under Xi Jinping reign China, while trying to register its presence on global map firmly, has been trying to shape global standards and institutions. Former Editor of Far Eastern Economy says “This is manifestation of Chinese ambition to become superpower in 21st century.” That is real intent of China is to change geo political balance in the world. 

Some experts try to explain BRI little differently and they say China's image before its neighbours would improve with this as BRI would help them improve their economy.Some other experts try to explain BRI in the context of America's diplomacy. In 2011 when US Administration under Obama started concentrating on Asia with renewed interest, China thought it to be an attempt to reduce its position in the continent. A former Chinese Military officer said that BRI is a strategic attempt to counter American advance towards East.

China is also trying to develop its western region, which has remained more or less neglected so far, with this initiative. Therefore one can conclude that China's BRI is an attempt to overcome problems faced by its economy to take Chinese economy on the path of sustained development. It's notable that most of the developing countries, striving to develop, have been plagued with the problem of 'Middle Income Trap'; and they fall into a trap due to one reason or the other, after reaching a level of income. This is what is called 'Middle Income Trap'. Chinese government's objective is to give a boost to Chinese exports with the help of BRI, to help China come out of declining trend.

Whether we go by what experts are saying about BRI or we make a reality check looking at implementation system of BRI projects, we are made to understand that BRI is primarily China centric. Though we find rampant corruption in implementation, indiscipline, lack of planning and inflated costs, Chinese government has been pushing BRI hard, riding on its financial muscles.

Experts believe that since China has a large amount of foreign exchange reserves, which are not being used appropriately, and China is not getting fruitful returns, utilising these unused foreign exchange reserves will be possible in BRI. Significantly, China has foreign exchange reserves of nearly $ 3000 billion.

Chinese government companies, who have been going through a huge financial crisis in the absence of business, can expand their work through BRI, especially construction and engineering services abroad and earn huge profits.

Can BRI save China from downfall?

Through such a large scale development project, China is trying to entrap the BRI countries and establish their economic dominance. Simultaneously, China also has an endeavor that its companies will have the opportunity to fetch business through these projects. The way the plan is being executed and the infrastructure that has been built so far, mostly the Chinese companies are getting benefitted. Many times, Chinese companies are also making profit from fraud and wrong methods. Generally, Chinese companies are making profits in the creation of infrastructure in less prosperous markets. The Chinese investment firms, which have been hit by recession, has mostly benefited from these projects.

There is a lot of criticism of China due to trapping of these poor countries into debt and the indiscipline of Chinese companies. Due to the inefficiency of the Chinese companies, lack of adequate planning and lack of transparency, questions have started arising regarding the BRI scheme. In such a situation, the Chinese government has begun to change the entire strategy of BRI. Now they are talking about 'Third Party cooperation' and shared investment by different countries. Now China has understood that it will have to share the benefits of business through BRI with other countries. European companies have also started making cost benefit analysis of BRI projects.

Rising fears against China

It is clear that China is pushing its interests through BRI, whether it is the investment of China's large foreign exchange reserves, business arrangements for its companies, and the trapping the poorer countries of the world into deep debt, to pursue their strategic interests. However, China's disguised or actual scheme is being hidden from the world and it is being told that it is pushing the BRI scheme for world welfare. China says that it is trying to increase the connectivity between the countries of the world through the BRI, thereby increasing trade between these countries, with an estimated objective to increase growth, promote cultural exchange and end poverty.

But China's logic is not being accepted by the world on its face value. The way China is aggressively pursuing BRI, it is also leading to a number of doubts in many countries of the world. There is a growing apprehension that the unity of ASEAN countries can be broken by BRI. At present, ASEAN's leadership was trying to preserve the regional interests; due to the BRI project, there are agreement by China and other countries on bilateral basis, which may lead to regional economic focus on China.

At the same time, there are concerns due to the problem of debt crisis coming to many countries, that China is pushing the debt-laden diplomacy through BRI. Due to this, sovereignty and autonomy of the nations is being affected. By using the logic of economic development, China has increased its concern about the establishment of its sea ports in Myanmar, Pakistan, Sri Lanka etc. in the Indian Ocean region. Non transparent contracts, predatory loans (under debt trap strategy), of the deal and corrupt deals; are all affecting the sovereignty of the countries.

The countries of this region, which have border or maritime disputes with China, are also apprehensive that the way the main infrastructure projects are being transmitted through China, it may have an adverse impact on national security. Meanwhile, China has called for its immigrant citizens to be included in this scheme, due to this, there is concern among countries like Malaysia and Indonesia.

Because of China's aggressive implementation of its BRI scheme, its opposition is increasing at the global level. Particularly the world's largest powers like America, India and many countries of Europe, many countries stand in its opposition. To somehow tone down the opposition of BRI, China has started lowering down its bigger plans. China is trying to make clear and well-defined rules in the projected infrastructure project. The Chinese government is also exploring the possibility of redefining the BRI project so that the level of transparency can be increased. China realises that it will not be able to run such projects single handed. After the change in China's stance, positive signs of increasing its partnership with other global powers like Japan, etc. have also been shown, and Japan is also ready for cooperation for investment in Thailand. China must consider that instead of forming a China-centric project, it should be changed into multilateral project, in which the participation of all the small countries should is ensured. If this happens then it is possible that the big powers of the world can come forward to take this project seriously.

Pakistan's experience with BRI

The China-Pakistan Economic Corridor (CPER) is said to be the first project of BRI. To understand the future impact of BRI, Pakistan's experience of CPER is actually the torch bearer for the world. Four years ago, the then Prime Minister of Pakistan, Nawaz Sharif, had said that the CPEC would prove to be a 'game changer' for Pakistan and South Asia. But after four years, the way in which Pakistan has sunk into debt, the government revenue is not growing, and the GDP growth of Pakistan has dipped from 5.8 percent in 2017-18 to 3.4 percent in 2018-19 and in 2019-20 it is expected to dip further to 2.7 percent, nobody in Pakistan can afford to say that the CPEC is a 'game changer'.

Today Pakistan is going through a huge payment deficit. The advantages of CPEC are not seen anywhere. This plan of 15 years between 2015 and 2030 will include industrial zones, Special Economic Zones, construction of power projects etc. By 2018 $18 billion has been spent on 22 projects, out of them there were 10 power generation and 3 road projects. Interestingly, 4000 MW of additional power is being generated from these power generation projects, but without much use, since Pakistan does not have the capacity to transmit and distribute electricity, because its transmission lines, transformers and grid have worn out. The point of concern for Pakistan is even more acute due to the production cost of electricity, theft, transmission and distribution losses; and the cost of security by the Chinese people in these projects. All these factors are pushing the cost of electricity from these Chinese projects to an extra ordinarily high level.

Another major project of CPEC, Gwadar Port, which was inaugurated in November 2016, is not earning sufficiently, since the port has to compete with other ports in the region and there is a lack of industrialisation there. It is worth mentioning that for the next 40 years, China is destined to get 91 percent of its earnings from this port.

In the same CPEC project, a 7000 km long pipeline is also being set up, which will take oil and gas from Gwadar port to the city of Tianjin, China, east of China. Interestingly, the cost of transportation of oil from this line is higher by $10 per barrel as compared to waterways. The success of the Dasu Rehabilitation Project will also depend on the use of that infrastructure. While India, Iran and Afghanistan are holding Pakistan responsible for terrorist activities, there is very remote chance that they will use the infrastructures made in Pakistan for their businesses.

It looks that due to the huge cost of the construction project in China, the burden of debt is increasing on Pakistan and due to the pressure of payment and most uncertain benefits from these infrastructure projects Pakistan is in deep trouble and woes of Pakistan May multiply in future. Therefore, Pakistan need not be very optimistic about CPCSE project.