“China’s BRI will ride out the pandemic”

Pradumna B Rana is Visiting Associate Professor at the Centre for Multilateralism Studies of the S. Rajaratnam School of International Studies (RSIS) at the Nanyang Technological University (NTU) in Singapore. He has authored or edited 20 books, and his latest is China’s Belt and Road Initiative: Impacts on Asia and Policy Agenda co-authored with Xianbai Ji. 

Nepali Times: Why the BRI, and what is the value-added of your book?

Pradumna B. Rana: As you know, the BRI is President Xi Jinping’s foreign and economic policy initiative to connect and develop the Euro-Asian super-continent. Over 165 countries in Asia, Europe, Africa, and Latin America have signed up for the BRI. It was launched in 2013, in the usual top-down campaign style manner, with few details. Issues are only now becoming clearer. We wanted to document these details.

Also, existing analyses and commentaries are based on narrow samples and case studies. We wanted to capture the views of opinion leaders (defined as policymakers, academics, and representatives of businesses and media) from a broad range of stakeholder countries, 26 Asian countries that have signed the BRI MOU with China.

Hence, Japan, Australia, and India were excluded from our survey. China was also excluded for obvious reasons. To the best of our knowledge, our survey is the first of its kind.  In addition, our book also presents the simulation results of a computable general equilibrium model of the world economy. This is another value-added.

Will the BRI lead to a win-win situation for both China and the BRI stakeholder country as claimed by China, or will it benefit only China as alleged by Western countries?

The answer is: it depends. The 1,200 plus opinion leaders from 26 countries who responded to our perception survey felt that the present version of the BRI or BRI 1.0 has a number of problems like lack of transparency and openness, China’s lack of sensitivity to local conditions, and its unwillingness to allow local contractors to bid for BRI projects. Despite this, most respondents felt that if China reformed the BRI along the lines suggested in the survey, then ultimately BRI 2.0 could lead to a win-win situation.

The BRI is frequently portrayed as a geopolitical strategy that ensnares countries in unsustainable debt or the so-called debt trap diplomacy. Is this true?

Although 27% of our respondents had yet to decide, 40% felt that the debt-trap argument was not true. Only 30% supported the debt-trap diplomacy theory. Some respondents felt that domestic factors (such as corruption and reckless borrowing) were responsible for the rising levels of debt in several BRI countries like Malaysia, Pakistan, and Sri Lanka. Yet others felt that China’s financial system was too fragmented and poorly coordinated for it to pursue detailed strategic objectives such as snaring countries in debt traps. So, the debt-trap argument is probably more a myth rather than a reality.

How can Nepal itself benefit from the BRI?

The simulation results of econometric models show that landlocked countries are the largest beneficiaries of the BRI. Mongolia is fast-becoming a land-link between China and Russia. Countries in Central Asia (such as Kazakhstan and Kyrgyzstan) are also becoming land-links between China and Europe. Nepal could similarly benefit by becoming a land-bridge between China and India, but at the present time the proposed Trans-Himalayan Economic Corridor is not feasible because of the strong opposition to the BRI from India.

Our simulation results, however, show that even without India, the Nepal-India Trans-Himalayan Multidimensional Connectivity Network agreed when President Xi visited Kathmandu in October 2019, could have sizeable, although much reduced, economic benefits. Nepal should, therefore, take actions to diversify its trade by making the Protocol to the Agreement on trade and transit signed in April 2019 effective as soon as possible and also by seeking financing for viable infrastructure projects from China.

How has the BRI been affected by the COVID-19 pandemic, will it ultimately fizzle out?

The BRI has been adversely affected by the pandemic because with massive lockdowns and border restrictions, the physical dimension of the BRI ground to a halt. China, therefore, started to focus instead on building the Health Silk Road (manufacturing and distributing PPEs and ventilators) and the Digital Silk Road (mainly for contact tracing and e-commerce). As the pandemic situation improves, China will surely restart the Physical BRI.

Exports of many BRI countries also suffered because of the pandemic, and they are facing difficulties in servicing their debt to China. Beijing is helping these countries restructure their debt including forgiving of part their debt obligations. So, the BRI is not about to collapse.

China will not let that happen because this project, labelled as the ‘project of the century’ by many, marks China’s re-emergence in the global scene and its eventual ascent to be the number one economy in the world.