Colombo, October 31:

The United States, in collaboration with its allies, has been working on developmental projects to give the developing countries an alternative to China’s Belt and Road projects, which according to Western governments, put recipient countries in a debt trap.

But these alternative Western plans have not seen success so far, admits a paper in the journal of the Council on Foreign Relations (CFR) written by James McBride, Noah Berman, and Andrew Chatzky in February 2023.

McBride, say: “President Donald Trump passed the BUILD Act, which consolidated Overseas Private Investment Corporation (OPIC), a U.S. government agency for development finance, with components of the U.S. Agency for International Development (USAID) into a separate agency (the Development Finance Corporation) with a $60 billion investment portfolio.”

“ In 2021, President Joe Biden, in collaboration with the Group of Seven (G7), launched the Build Back Better World Initiative (“B3W”) an infrastructure investment program conceived to compete with BRI.”

But a lack of financing has prevented these plans from acting as a serious challenger to China’s initiative, the authors acknowledge.

“One year after B3W was announced, commitments under the initiative totalled only U$ 6 million, and it had been renamed the Partnership for Global Infrastructure and Investment.”

West’s Alternatives

McBride, go in to suggest that rather than investing in infrastructure, where China holds an economic advantage (China won more than eight times as many World Bank-funded infrastructure contracts as the United States in 2020), the US should boost its aid-based lending through existing multilateral institutions, such as the World Bank and IMF.

Jonathan E. Hillman, of the Centre for Strategic and International Studies, even goes to suggest that the US could well use BRI projects as a way to have China pay for infrastructure initiatives in Central Asia that are also in the US interest!

Be that as it may, Western scholars continue to the chant that BRI projects create unmanageable debt. They quote a 2021 study of hundred debt financing contracts China signed with foreign governments, found that “China views BRI projects as a commercial endeavour, with loans close to a market interest rate that it expects to be fully repaid.”

Furthermore, “some BRI investments have involved opaque bidding processes and require the use of Chinese firms. As a result, contractors have inflated costs, leading to cancelled projects and political backlash.”

“The contracts often contain clauses that restrict restructuring with the group of twenty-two major creditor nations known as the Paris Club.”

CFR’s Belt and Road Tracker shows that the overall debt to China has soared since 2013, surpassing 20% of GDP in some countries.

“Since the COVID-19 pandemic and the Russian invasion of Ukraine roiled global markets, a climbing number of low-income BRI countries have struggled to repay loans associated with the initiative, spurring a wave of debt crises and new criticism for BRI. In Pakistan, for example, imports required to build CPEC infrastructure contributed to a widening budget deficit, ultimately resulting in a bailout from the International Monetary Fund (IMF). In Ghana and Zambia, high debt loads that partly consisted of BRI loans led to sovereign default,” CFR points out.

China’s Policy  

However, China has declared that it would pursue its development-oriented foreign policy because it has succeeded.

Recently, China released a special document on its neighbourhood policy, which says that the policy is based on developmental cooperation for mutual benefit.

The Chinese document says that the political and economic situation in its neighbourhood is very challenging. There could be two approaches to the challenge: One is the Chinese approach and the other is the Western approach.

  • The Chinese approach advocates true multilateralism, a development-first approach, mutually beneficial cooperation, openness and inclusiveness, integrated development, and pursuit of common development in harmony.
  • The Western approach represents a relapse into the Cold War mentality and exclusive clubs, and attempts to draw lines based on values, politicize economic issues, divide the region into different security blocs, and stoke division and confrontation.

“Over the past half-century and more, Asia has tended towards the first approach based on cooperation rather than confrontation,” the document contends.

“This is mainly credited to the commitment of the countries in Asia to independence, unity for strength, mutual respect, inclusiveness, mutual learning, mutual benefit and win-win cooperation,” the document says.

China’s Extensive Reach

Despite the obstacles that had appeared in its path, China has reached understandings with Pakistan, Laos, Cambodia, Myanmar, Indonesia, Kazakhstan, Tajikistan, Uzbekistan, Thailand, Mongolia, Turkmenistan, Malaysia and Kyrgyzstan on building a community with a shared future, the document says.

China has resolved boundary issues with 12 neighbours on land through negotiations. It has signed and ratified the Protocol to the Treaty on a Nuclear-Weapon-Free Zone in Central Asia, respects Mongolia’s nuclear-weapon-free status, became the first to join the Treaty of Amity and Cooperation in Southeast Asia and is fully prepared to sign the Protocol to the Southeast Asia Nuclear- Weapon-Free Zone Treaty at any time.

Trade and Investment

The document points out that China is the largest trading partner of 18 neighbouring countries. In 2022, China’s trade in goods with neighbouring countries exceeded US$ 2.17 trillion, up by 78% from 2012.

Two-way investment between China and ASEAN has exceeded US$ 380 billion in cumulative terms. China took the lead in ratifying the Regional Comprehensive Economic Partnership (RCEP) and worked for its entry into force and implementation, enabling and enhancing regional economic integration.

Belt and Road Initiative

The document points out that China has signed Belt and Road cooperation documents with 24 neighbouring countries and worked to synergize the BRI with the cooperation plans of ASEAN and the Eurasian Economic Union.

It has initiated the establishment of the Asian Infrastructure Investment Bank and the Silk Road Fund to provide financial support for infrastructure projects.

The China-Central Asia mechanism established by China and the five Central Asian countries has emerged as an important platform for in-depth cooperation between the six countries, it says.

The Lancang-Mekong Cooperation is a success story of mutually beneficial cooperation in the sub-region, and the Lancang-Mekong Cooperation Economic Development Belt is taking shape, the document says.

Political Issues  

China has helped solve political issues too, the document says.

“On Afghanistan, China has established a mechanism for coordination and cooperation among Afghanistan’s neighbours, relaunched the China-Afghanistan-Pakistan Foreign Ministers’ Dialogue, and issued the Tunxi Initiative on helping Afghanistan with reconstruction and development, building synergy among various parties.”

“On Myanmar, China has encouraged the parties to bridge differences, restore social stability in the country, and launch political dialogue as quickly as possible.

The Future

On the future, the document says that China will continue to promote the process of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA.

The document stresses the importance of maintaining the stable and smooth operation of industrial and supply chains to underpin open and inclusive cooperation. China will keep in mind climate change issues and promote green energy, it added.