THE BELT AND ROAD INITIATIVE
Gwadar Port, Pakistan
April 11, Marine boots on the ground inMB
The Belt and Road Project is conceivably the most ambitious development project in 2000 years. The Romans built roads mainly to facilitate the movement of troops, but the BRI has far wider and more humanitarian aims; these being raising the living standards and conditions in all countries and territories in affects. The project is led by the Chinese Government and it could be assumed that its experience in the past 30 years has influenced the rate of adoption by countries that will br have been connected.
What China will gain from promoting this project is quite obvious. Raising the standard of living in other countries means its citizens will have more disposable income to spend on Chinese manufactured goods. At the same time, China needs the raw material in many of these countries. Kazakhstan, China’s next door neighbor has oil and iron. The Kazakh government will gain extra revenue to spend on services – schools hospitals, road, water supplies; there will be more job opportunities.
World Bank has done a pre-investment study on Kazakhstan which although lengthy, is worth reading to see how Development Banks think
ORIGINS OF THE BELT AND ROAD INITIATIVE
In the 1920s Sun proposed an immense infrastructure program of railways, roads and river projects for rapid agroindustrial and manufacturing development of all China. He advocated constant improvement of citizens’ livelihoods though public infrastructure, scientific progress, and technologically advanced transportation and agriculture, saying, “We must use the great power of the state and imitate the United States’ methods.”
"Today’s China continues Sun Yat-sen’s nation-building projects. In 2016 Chinese President Xi Jinping honoured Sun Yat-sen, declaring that Communist Party of China (CPC) members were faithful successors of Sun’s revolutionary undertakings, in pursuit of a “rejuvenated China that he had dreamed of”.
"At the 1996 Beijing Land-Bridge conference, nearly two decades before announcement of the BRI, Chinese official Gui Lintao from the ancient Chinese capital city and Silk Road terminus Xian, set forth a perspective for Xinjiang’s development on the “modern Silk Road”: “The Chinese government has … enabled a large number of demobilised officials and soldiers, young students, government officials and professionals from coastal and inland areas, to join the economic construction in the West. As a result, the Xinjiang railway line has been built up and a number of outposts, buried deep under the desert along the ancient Silk Road, are now shining like dazzling pearls along the Continental Bridge.
"A pivotal conference took place 7-9 May 1996 in Beijing, themed “Economic Development of the Regions along the New Euro-Asia Continental Bridge”. Chinese speakers were joined by leading specialists from Iran, Russia and other Eurasian nations to discuss proposals for cooperation on ambitious infrastructure projects of high-speed railways, ports and agro-industrial corridors. Helga Zepp-LaRouche, founder of the international Schiller Institute, spoke on
“Building the Silk Road Land-Bridge: The Basis for the Mutual Security Interests of Asia and Europe”, emphasising that the Land-Bridge could be the backbone of “a grand design for peace through development” and a cultural renaissance.
Also present at that event was Sir Leon Brittan, the former UK Home Secretary under Margaret Thatcher who was then the European Union’s commissioner for foreign relations. Eyewitnesses observed Brittan’s distress at Zepp-LaRouche’s speech and reported that he violated normal diplomatic behaviour in his zeal to disrupt the conference, threatening the Chinese with retaliation if they dared operate outside the global financial markets and the policy parameters of international agencies like the International Monetary Fund, World Bank, and World Trade Organisation. In November 1996 former PM Thatcher herself travelled to Beijing for a conference on economics, where she inveighed against China for alleged human rights violations and provocatively referred to Taiwan as an independent county."
OBJECTIONS FROM THE WEST
INSTITUTIONS AND AGENCIES INVOLVED IN THE BRI
International financial institutions such as World Bank, EBRD, IMFand ADB actively support the BRI. Political and international aid and political institutions such as UNDP, OECD. EU also voice their support. Fund management bodies Deloitte and Morgan Stanley are positive.
UK is ambivalent while America and Australia alone actively oppose the BRI.
The international banks are competitive. They have strict rules and require loans to be repaid. Countries have credit ratings and countries deemed
uncreditworthy will not get loans. If in rare cases, a country is unable to repay a loan, the bank will arrange with a donor country to give grant aid to the debtor country.
The China led AIIB is an international development bank as is World Bank AIIB has different rules and regulations which allow it to lend to less creditworthy nations - those who need loans for development most. AIIB is much more flexible and has a number of mechanisms to prevent countries from suffering of failing because of temporary inability to pay. The debt trap scenario is thus avoided.
A preliminary examination of the Belt and Road Initiative might lead one to the following observations:
1. Chairman Xi JinPing did not have an Eureka moment in 2013 when he announced the BRI. He gives credit to Sun YatSen for this.
2. International Development Banks and other international Organisations whose purpose is to improve the standards of living throughout the world have espoused the BRI.
3. The China led, internationally funded Asia Infrastructure Investment Bank is founded to support countries with poor credit ratings. These include Pakistan, Sri Lanka and Vietnam. The AIIB is currently funding Projects in these countries.
4. Western Anglophone countries are actively opposing and apparently attempting to sabotage the BRI, despite advice from their own think tanks.
5. Covid 19 has caused some disruption of progress in some countries.Western Media portrays delays as failure if the initiative.
Not surprisingly, a great number of Chinese institutions and mechanisms are involved in the Belt and Road Initiative (BRI). These include political steering agencies, multilateral cooperation mechanisms, funding institutions, platforms, think tanks and relevant state-owned enterprises. The list is constantly being updated and supplemented.
Complete information on AIIB activities
China 26% voting power. India 7.6%, about 80 countries with voting power ranging from 4% South Korea £.9% to 0.14% Tonga.
Non regional voting members include Denmark, Argentina, Canada 1% and Nigeria
INTERNATIONAL DEVELOPMENT BANKS
China proposed the Belt and Road Initiative (BRI) in 2013 to improve connectivity and cooperation on a transcontinental scale.Quantifying the impacts of the BRI is a major challenge, which is why the World Bank Group has produced empirical research and economic models that assess the opportunities and risks of BRI projects.
The World Bank is regarded as America's international aid Bank while Asian Development Bank is regarded as Japan's aid Bank. World Bank's assessment of the BRI should be read by American Government Officials.
"Our research presents data that enables policymakers in countries along BRI corridors to make evidence-based assessments of how to maximize the benefits and minimize the risks of participating in the BRI. The research also aims to inform the public debates surrounding BRI, by grounding the discussion in data and analysis."
Christine Lagarde, IMF Managing Director
"Yesterday (2019), we discussed the financial links that can create jobs and opportunities for nations involved in the Belt and Road Initiative — known as the BRI.Tomorrow, leaders will meet to discuss the next phase of the BRI, focused on implementation. This will include ways to further promote trade, foster greater financial inclusion, and facilitate more people-to-people connections."
Multilateral development banks (MDBs) including the EBRD aim to mobilise private sector investment and contribute to sustainable development. This is aligned with some of the stated objectives of the Belt and Road Initiative (BRI) (一带一路).The EBRD is already deeply engaged in many of the economies along the Belt and Road corridors where the infrastructure needed to support more robust, sustainable growth remains underdeveloped.
Asian Development Bank (Manila)
ADB seems to be less involved than other international development banks. AIIB may have usurped its role in Asia. ADB is Japanese "owned" as World Bank is American owned. Invested to date$440,000 for technical assistance".
Has AS YET only two projects that can be loosely associated with the BRI.
Investment and Finance Landscape
China's Belt and Road Initiative (BRI) development strategy aims to build connectivity and co-operation across six main economic corridors encompassing China and: Mongolia and Russia; Eurasian countries; Central and West Asia; Pakistan; other countries of the Indian sub-continent; and Indochina. Asia needs USD 26 trillion in infrastructure investment to 2030 (Asian Development Bank, 2017), and China can certainly help to provide some of this. Its investments, by building infrastructure, have positive impacts on countries involved. Mutual benefit is a feature of the BRI which will also help to develop markets for China’s products in the long term and to alleviate industrial excess capacity in the short term. The BRI prioritizes hardware (infrastructure) and funding first.
American Government Officials should read their OECD's take on the BRI.
1. Infrastructure investment as an effective means to Sustainable Development: experiences of China and the world
1.1. International Experiences of Policy/Developing Finance Institutions and Infrastructure Investments
1.2. China’s experience: Basic industry and infrastructure investment as key drivers for economic growth and national development
Table 1 Gross Statistics of Basic Industries &Infrastructure Investment from 1954 to 2008 1.3. Building on lessons learnt: The role and “packaged loans” approach of China’s Developing Finance Institution
27/09/2018 Dunhuang - “The Belt and Road Initiative (BRI) is an ambitious initiative, sparking a new momentum for international cooperation not only in the economic sectors, but also in the agricultural sector. Such international collaboration aims to bring together a wealth of expertise, disciplines and developmental actors to explore a more balanced, equitable and inclusive development model – one that will benefit the countries along the Belt and Road Initiative and far beyond”, said by Dr. Vincent Martin, FAO China’s Representative.
The EU-China Connectivity Platform
The European Union (EU) and the People’s Republic of China (China) are committed to maintaining and developing strong and fruitful relations in the area of transport. In an effort to improve transport connectivity, the European Commission (DG MOVE) and the National Development and Reform Commission of China (NDRC) established a Connectivity Platform in 2015. The main objective of the Platform – as agreed by both sides – is to explore opportunities for further cooperation in the area of transport with a view to enhance synergies between the EU’s approach to connectivity, including the Trans-European Transport Network (TEN-T), and China’s Belt and Road Initiative (BRI). The platform is also used to work towards greater transparency, reciprocity in market access and a level playing field for businesses in the area of transport infrastructure development.
IVESTMENT MANAGEMENT ORGANISATIONS & RESERVE BANKS
lthough SOEs have undertaken the bulk of BRI projects to date, we expect many more POEs and MNCs will become involved in the near future. At the country level, while most participants are developing countries, it is also true that developed nations are increasingly involved.
While the initiative had gotten off to a slow start, Morgan Stanley Research believes it will accelerate in 2018. “We’re seeing improved economics in Belt and Road countries, alongside supportive government policies in China,” These factors reinforce our view that China’s investment in B&R countries will increase by 14% annually over the next two years, and the total investment amount could double to $1.2-1.3 trillion by 2027.”
"Business and economic ties between China, Europe and BRI countries continue to strengthen. By committing to the Green Investment Principles, we are pledging that we will not only help steer BRI’s open collaboration across countries from China to Europe, but also strive to ensure these projects are as sustainable as possiblE
The reaction of the United States to the BRI seems largely to be Twitter borne and stresses confrontation with and "containment of China. This approach appears to emanate from the Arms Industry and not, as can be seen from the above, from the financial sector. Whether wiser minds prevail in the future remains to be seen. Think tanks advocate a change the foreign policy direction.
China’s Belt and Road Effort Demands a Multipart US Response
U.S. inaction, as much as Chinese assertiveness, is responsible for America’s economic and strategic predicament, a Council on Foreign Relations task force finds.
"China's Belt and Road Initiative (BRI) is the country's most ambitious foreign policy undertaking in modern times and is central to Chinese President Xi Jinping's legacy. ... BRI undermines global macroeconomic stability by lending funds to unsustainable projects, thereby adding to countries' debt burdens.Mar 26, 2021--"
This paper should be read.
Fortune Magazine notes, "Trump’s approach to China’s Belt and Road Initiative failed. Biden must take a new tack on One Belt One Road
A Parliamentary paper tends to show Britain's ambivalence towards towards the project.
"In practical terms, it is organised around land connections (the Silk Road Economic Belt) and sea connections (the 21st Century Maritime Silk Road). At its core is Chinese financing and construction of infrastructure in Asia, but as the FCO notes, its vision has expanded dramatically: it is no longer regional but global in vision, and is not only concentrated on infrastructure, but encompasses “trade policy and financial integration; shared standards; a ‘digital BRI’; cultural, media and tourism exchanges; a Chinese ‘model’ for developing countries to follow; and new ‘Chinese solutions’ on global goods and global governance”.44 A major component of the BRI, in an area in which the UK has significant interests, is the $60 billion China–Pakistan Economic Corridor (CPEC).45 It includes plans for motorways, railways and energy pipelines in Pakistan, accompanied by power plants and industrial facilities, as well as a Chinese-operated port at Gwadar.
COUNTRY CREDIT RATINGS
Country credit ratings by international banks have not yet been located. Link to ratings by S&P, Moody and Fitch.
Mamy of the key countries of the the BRI fit the "non-investment grade. Pakistan and Papua New Guinea, Mongolia, Kazakhstan, Uzbekistan are in this category. AIIB has lent to Pakistan for the Kashgar/Gwadar link.
April 12, 2020 One hundred and forty counties and regions have signed a memorandum of understanding.