BRI Topic #1:
Political Implications

Debt trap

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China's use of loans in BRI projects has led to unsustainable debt for recipient countries. This debt trap – into which many African countries have fallen – has set the stage for China to build diplomatic relationships by gaining significant control over foreign assets and the invested country’s government. Tons of countries in Africa suffer heavy debt from participating in the BRI. Naturally, when one country gives money to another for some purpose, the recipient is expected to have to pay it back in the future. Unfortunately, many members of the BRI lack monetary funds and the ability to make money then forces them into an uncompromisable position.

Kenya: (Jerome)
For example, 19.4% of Kenya’s debts that it needs to pay to creditors come from China, making it the country’s third largest external creditor. The debt accumulated following avid acceptance of Chinese loans to fund infrastructural projects. However, despite low-interest rates, Kenya soon accumulated massive debt in compensation. The ability to pay these debts was questioned constantly as the debt had exerted heavy pressure on the national budget. This trap had two main implications. For one, the debt burden could mean that Kenya would lose control over their infrastructure system, which would be given to China. This then sparked heavy concern that Kenya would lose its national sovereignty and control of infrastructure. Second, the debt would heavily shape Kenya’s diplomacy with China. Fearing what would happen if China took the assets and if they pulled back its support, Kenya would start to align with Chinese actions, thus allowing China to control diplomacy using the BRI.

• Internal issues that have affected the Chinese economy have also led to hugely diminished funding, says Nigeria's former Deputy Central Bank Governor, Kingsley Moghalu.

• "The funding levels in the past couple of years have not been more than $2bn across the continent," he says - down, he estimates, from between $10bn and $20bn a decade ago.

  • That is 20%

• And there is also a feeling that not all that money went to building the railway," says Mr Gichinga.

• But the billion-dollar project using loans and contractors from China became mired in controversy and struggled to prove viable, leaving Sri Lanka saddled with growing debts.

• Finally, in 2017, Sri Lanka agreed to give state-owned China Merchants a controlling 70% stake in the port on a 99-year lease in return for further Chinese investment.

 

Sources:

• https://www.bbc.com/news/world-africa-67101736

Pakistan: (Jerome)
The same goes for Pakistan, as mentioned above, which has been invested in the China-Pakistan Economic Corridor. The result of the investments turned out to be a very crippling debt. The number has risen so dramatically that it is speculated that Pakistan could fail to pay back the debt due to how large it is. This debt trap then spells horrific implications for Pakistan. Loan defaults would result in China gaining control and influence over the same assets they funded, resulting in a potential loss of national sovereignty and infrastructure for Pakistan. Places such as Gwadar Port could become controlled by the Chinese, which then naturally expands Chinese control and influence over Pakistan. Additionally, the need for further financial support from China also will manipulate Pakistani diplomatic policy and position, further demonstrating the power of the BRI and its debt as a way to subjugate other countries into complacency with China diplomatically.

Political Effects and Policies

Even better for China’s political power is that the BRI, since it renders so many countries dependent on Chinese funding for improved infrastructure and as the potential hope they need for future economics, gives China a heavy tool of leverage to then use against those easily it disagrees with or to force them to maintain diplomatic relations with China.

Lithuania: (George)
By funding infrastructure to the Global South and other regions across the expanses in Europe, Asia, and Africa, China successfully has managed to get many of the countries in these on board with their own notions and political takes. The BRI has only further strengthened heavy Chinese support in Sri Lanka after they joined the Initiative. Also, many other countries, under the sway of the BRI, have officially denounced Taiwan from their diplomatic recognition, something that further endorses Chinese politics against it.
For instance, in 2021, following Lithuania having a conflicting opinion on the status of Taiwan compared to China, the country would cut off a freight rail service in Lithuania, which likely would force Lithuania into an economically uncompromisable position. 

 

Sri Lanka: (Justin)
Expanding on Sri Lanka for a moment, the BRI helped fund Hambantota port in the country. However, some nations such as the U.S. and India felt that the port was a stronghold for the Chinese military in the region that could challenge their sovereignty in the region (for the U.S.) and challenge state interests (for India). This power is a new unprecedented situation for the world, as China slowly but surely starts to permeate into the other parts of the world, resulting in them having tons more political power and control in the Indian Ocean.

Greece: (George)
Even European nations, though they are not a part of the BRI itself, have collaborated with China on BRI-related projects, helping increase Chinese influence by destabilizing soft power influence. For instance, Greece has economic ties with China under BRI infrastructure cooperation such as the Piraeus Port. Such economic ties have caused Greece to Align with China in multiple international forums such as the EU and foreign policy shifts to consider Chinese interests while shifting further away from more traditional allies like the U.S. This can then weaken EU unity due to conflicting opinions on China, which is one indication of the sheer influence the BRI and its related projects have exerted. They are successfully manipulating countries in other parts of the world to feud with each other, thereby increasing their influence. Additionally, Greece’s involvement also strengthened China’s power in the Mediterranean as well, which added to China’s political power from the BRI.  

Furthermore, as more and more European countries joined the BRI projects, Chinese firms began to go up the value chain, removing competitors native to Europe through many different industries. This perpetuates the idea that the BRI is allowing China to sneakily climb its way up the power ladder, usurping its competitors through those that it connects with in its attempts to make a global Silk Road of free trade.

Kenya: (Justin)
Kenya’s involvement in the BRI would also help China have a chokehold over the country’s infrastructural development through its funding. Thus, when the Chinese cut off their funding temporarily, Kenya suffered greatly and created a debate over who should sponsor infrastructural projects, citing the problems of relying on Chinese loans and economic instability. The inability to pay the debt also raises similar questions about Pakistan’s national sovereignty and ability to make rational decisions permeating Kenya. This is further demonstrating China’s comically increased political power in the country.

Many countries end up being unable to control their destiny due to their heavy reliance on external creditors, making them far less powerful. The former Tanzanian President John Magufuli had refused to let China fund a railway project, with some supporters arguing that they did it to not feel like they needed to be grateful to China for sponsoring any project and becoming a dependent subject for the country. The open proclamation demonstrates that this kind of dynamic has persisted in other areas China supports using its BRI, squelching a sense of self-sufficiency within those it supports. This then can be correlated to increased amounts of Chinese power in the area, once again demonstrating the sheer power the BRI has provided China in its relationships with other countries.

Zambia: (Michael )
Zambia, an African country that has major debt in China, is a very good demonstration of the political control of the Chinese. Over the past few decades, Zambia’s industries have received billions of dollars of lends from China through BRI and more specifically FOCAC, these loans or “investments” were mainly used in mining industries and railroad industries in Zambia. Chinese ownership of companies and resources in Zambia shows a very strong sense of neo-imperialism as they seem to be exploiting and abusing their power over Zambia’s economy and industries under their forums for future African development. A possible argument is that although the Chinese investment isn’t and doesn’t show benevolence, it’s undeniable that this foreign “investment” is helping Zambian infrastructure. But from a broader view, the Chinese dominance over the Zambian industries has caused many moral issues and violated a lot of policies or laws in Zambia. Examples of Chinese exploitation and control include violations of labor laws: the workers suffer from illegal working hours and overdose of toxic substances in the Chinese-owned industries. The question is why wasn’t the Zambian government doing anything about it? The Zambian government wasn’t able to do anything about it. Without Chinese or any foreign investment, Zambia's economy will only decline in its non-diverse and unstable state. The Zambian government relies on these loans and assistance from these other countries to sustain their economy and advancements. By this point, the Zambian government is trading in its local sovereignty to Chinese (and other foreign countries) infrastructure for its long-term economic support. The direct impact of this “trade” is that the government is signing treaties without the parliament even being informed. With the Zambian government blinding themselves, the workers have nobody to rely on anymore. During a riot where Zambians required improved safety measures and humanized treatment after an explosion that killed 46 workers in the Chinese-owned mines, 6 workers were shot by Chinese managers. Although this is manslaughter, the Zambians can only accept the fact that this was only an act of self-defense from their foreign helpers. We can see that the Zambian parliament needs strengthening to be able to enforce regulations and watch over these global partnerships to prevent extravagant and increasing debts caused by exploitation as they are now losing their political power to their investors. Though the African countries are taking IMF loans to promise the fact on debt restructuring by, for example, Zambia, cutting on fuel and electricity subsidies which will possibly save them 800 million dollars annually, their accumulating debt will only cause an eventual breakdown of their systems. Under these conditions, a hedge fund seems to be Zambia’s only choice to persist against the economic neocolonialism from both sides of the globe and to regain sovereignty from a Chinese debt trap. 

 

Sources:

• Hsiang, Evan. “Chinese Investment in Africa: A Reexamination of the Zambian Debt Crisis.” Harvard International Review, 25 Jan. 2023, hir.harvard.edu/chinese-investment-in-africa-a-reexamination-of-the-zambian-debt-crisis/#:~:text=In%202020%2C%20Zambia%20became%20the%20first%20post-COVID%20African. Accessed 22 Oct. 2023.

Pakistan: (Kelvin)
China's control over globally significant logistics nodes, such as ports, carries profound strategic implications, exemplified by the China-Pakistan Economic Corridor (CPEC) and its flagship project, the Gwadar Port. Situated near the vital Strait of Hormuz, Gwadar Port's strategic location is pivotal for global oil trade. Through long-term lease agreements, China gains substantial administrative and economic control over the port's operations, significantly impacting Pakistan's economic and foreign policy autonomy. Moreover, the potential for dual-use, including the docking of Chinese aircraft carriers, adds a military dimension to China's presence. This not only reduces Pakistan's economic dependence on the United States but also diminishes U.S. soft-power influence. Additionally, China's oversight of ground transport from Gwadar Port enables it to prioritize economic zones, potentially affecting the interests of the U.S. and other economic competitors. In times of conflict, China's control over critical infrastructure allows it to disrupt necessary logistical support, potentially influencing the security dynamics of the region. Furthermore, this control provides China with the ability to collect intelligence on U.S. military operations, potentially shaping strategic calculations in its favor. In essence, China's command over ports like Gwadar underscores how BRI projects can have far-reaching geopolitical and security implications, reshaping the dynamics of global trade and regional security.

 

Sources

• https://www.airuniversity.af.edu/JIPA/Display/Article/3111114/assessing-chinas-motives-how-the-belt-and-road-initiative-threatens-us-interests/

• https://www.bbc.com/news/world-africa-67101736 China's Belt and Road Initiative: Kenya and a railway to nowhere

• https://www.fpri.org/article/2023/09/chinas-belt-and-road-initiative-politics-over-economics/

• https://archivos.juridicas.unam.mx/www/bjv/libros/12/5550/19.pdf