The Belt and Road Is Not Dead Yet

In 2018, it seemed that China’s Belt and Road Initiative (BRI) was floundering. New leaders in both Malaysia and Pakistan called into question some of the terms of previously agreed upon projects, while BRI partners in Central and Eastern Europe voiced concerns about a lack of concrete progress. Meanwhile, media reports from Africa began raising alarm over mounting debt to China, and the secret but potentially onerous consequences should African governments fail to repay those loans.

Soon, Western media was awash in headlines like “How Asia Fell Out of Love With China’s Belt and Road Initiative” (Bloomberg), “Are the wheels coming off China’s Belt and Road megaproject?” (CNN), and “China’s Belt and Road difficulties are proliferating across the world” (Financial Times).

The immediate impetus for these reports was the return of Prime Minister Mahathir Mohamad to power in Malaysia. Always outspoken, Mahathir had no problem voicing his dissatisfaction over deals inked with China under his predecessor. The new government canceled three BRI projects (the East Coast Rail Link and two pipelines) after complaining about excessive costs and Malaysia’s growing debt burden.

Meanwhile, around the same time media reports emerged pointing to similar concerns within new Pakistani Prime Minister Imran Khan’s government: that Chinese projects were too costly, with not enough benefit for the host government. In particular, it seemed Islamabad wanted a change in focus for the China-Pakistan Economic Corridor (CPEC), the heart of the BRI in Asia. “Earlier, the CPEC was only aimed at construction of motorways and highways, but now the prime minister decided that it will be used to support the agriculture sector, create more jobs and attract other foreign countries like Saudi Arabia to invest in the country,” Information Minister Fawad Chaudhry told Dawn on October 9.

And in December 2018, Kenyan media began reporting that Nairobi might have to cede control of Mombasa port to China if it failed to repay infrastructure loans – a mirror image of what happened to Sri Lanka with Hambantota port. Kenya’s President Uhuru Kenyatta dismissed the story; but intriguingly, he did so by trying to reassure the public that “we are ahead of the payment schedule” rather than denying that Mombasa port had been put up as loan collateral. The terms of Kenya’s loan from China still remain under wraps, despite Kenyatta’s pledge to release the agreement to the public.

Amid rising concerns from leaders and the public, and a growing narrative accusing China of “debt trap diplomacy,” it seemed reasonable to ask: Is the BRI dead?

The huge Belt and Road summit held in Beijing from April 25 to 28 suggests otherwise. The previous Belt and Road Forum (BRF) in 2017 brought 29 heads of state to Beijing; this year China boasted of 37 such attendees, including Russia’s Vladimir Putin,Myanmar’s Aung San Suu Kyi, the Philippines’ Rodrigo Duterte, Italy’s Giuseppe Conte, Egypt’s Abdel Fattah el-Sisi, and Kenya’s Uhuru Kenyatta. Notably, many of the same leaders who had last year voiced concerns – including Pakistan’s Khan and Malaysia’s Mahathir – were there to lend support to the BRI in Beijing.

High attendance at the 2019 BRF, of course, doesn’t mean the previous reports of complaints and criticisms were untrue. But the basic fact of host government discontent with some aspects of the BRI likewise does not mean that leaders are willing to scrap the entire project, and the opportunities it provides for investment and development. Rather, BRI partners are getting more discerning about what their deals with China look like. The results is a BRI in transition, but not abandoned.

Look at Malaysia again. Less than a year after announcing its suspension, Mahathir stood before journalists to proclaim that the East Coast Rail Link project is back on track. Notably, however, it was only resumed after the Malaysian government negotiated a price cut of nearly one-third (to 44 billion Malaysian ringgit, or $10.7 billion, from the original 65.5 billion ringgit). Clearly, Mahathir’s issue with the project was the terms, not the railway itself – and terms can be, and in this case were, negotiated.

Likewise, Pakistan’s doubts applied to the terms of CPEC deals, rather than Islamabad getting cold feet about CPEC itself. In November 2018, a month after several of his ministers had expressed various concerns, Khan visited China amid much fanfare and renewed his government’s commitment to CPEC. “Prime Minister Imran Khan commended President Xi Jinping's visionary Belt and Road Initiative (BRI) that aims at enhancing regional and international connectivity,” the China-Pakistan joint statement issued during his visit proclaimed. “The two sides reiterated that BRI represents a win-win model of international cooperation and provides new opportunities for economic rejuvenation and prosperity of all countries.” That’s hardly the language of a country looking for an escape hatch from a bad deal.

Meanwhile, Kenya’s president not only attended April’s BRF but actively sought out more Chinese loans to fund an airport highway and a tech city outside Nairobi.

What all this signals is that the BRI is not an all-or-nothing deal. The project is in a constant state of flux, thanks to the way it functions: near exclusively as a series of bilateral deals between China and other countries. Those deals vary wildly based on the interests, visions, and negotiating capabilities of the individual BRI partner governments. The recent trend of more negative comments from leaders signals that countries are taking a hard look at the terms and pushing back – in some cases even renegotiating previous deals. But overall countries across Asia, Africa, and Europe still remain very interested in Chinese investment.

Both those trends are borne out by a 2019 poll from the ISEAS-Yusof Ishak Institute covering all 10 ASEAN member states. The poll found that 70 percent of respondents agree that their governments “should be cautious in negotiating BRI projects to avoid getting into unsustainable financial debts to China.” Notably, however, just 6.6 percent said that their country “should avoid participating in BRI projects” altogether.

The same poll found that many Southeast Asians are skeptical of the end goals of China’s mega project. A plurality of respondents (47 percent) think the BRI will primarily “bring ASEAN member states closer in China’s orbit”; just 35 percent thought it “provides needed infrastructure funding for countries in the region.”

Notably, however, by far the least popular response (15 percent) was that the BRI “will not succeed.” Keep that in mind the next time a media headline suggests otherwise.