In News

• This year marks a decade since China’s ambitious infrastructure funding project, the Belt and Road Initiative (BRI), was first outlined by President Xi Jinping. Spanning from Africa to Asia and seeing investments worth billions of dollars, it has also come under criticism over the years about how sustainable these debts may be.

Idea behind BRI

• President Xi Jinping announced the Silk Road Economic ‘Belt’ during his visits to Kazakhstan in 2013.
• The ‘Belt’ plan was to revitalise a series of trading and infrastructure routes between Asia and Europe. Connectivity through Central Asia was a key element of the initiative.
• Subsequently, President Xi announced a sea trade infrastructure called ‘Road’.
• This maritime ‘Road’ would connect China with Southeast Asia, Europe and Africa.
• The major focus has been to build ports, bridges, industry corridors and other infrastructure throughout South East Asia and the Indian Ocean.
• For some time, together these initiatives were referred to as the One Belt One Road Initiative (OBOR).
• Since 2015, it has been mostly referred to as the BRI.

Initially, the BRI was based on five principles:

• policy coordination
• infrastructure connectivity
• trade
• financial integration and
• people-to-people connections.
• Later, the sixth principle of ‘Industrial cooperation’ was also added.

BRI investments

• Between 2013 and 2018, the World Bank estimated that investment in BRI projects including energy projects was about $575 billion.
• Earlier, the Organisation for Economic Co-operation and Development (OECD) also estimated that the BRI investment projects were likely to add $1 trillion in funding between 2017 and 2027.
• China has hosted three BRI Forums in the years 2017, 2019, and 2023.
• These gatherings attracted significant participation from world leaders, leading to the signing of numerous agreements during each of these forums
• At the tenth anniversary of the initiative, the Chinese government declared that more than 150 countries and 30 international organisations have embraced the BRI.
• It was also reported that 3,000 BRI projects valued at $1 trillion, are currently underway across the globe.

Economic Corridors

• the New Eurasia Land Bridge; China-Central Asia-West Asia-EC; China-Mongolia-Russia-EC, China-Indochina Peninsula-EC, the China-Pakistan-EC (CPEC); and the Bangladesh-China-India-Myanmar (BCIM)-EC. At the second BRI Forum in 2019, a list of 35 major corridors/projects was released.
• As a large number of BRI projects are being carried out in nearly all parts of the world, they are affecting all major economies even if they are not participating in the initiative.

CPEC

• The CPEC has been a flagship BRI project from the beginning.
• Pakistan is going through a very difficult political and economic phase. But despite some analysts indicating that CPEC projects may create long-term problems for the economy, Pakistan is unlikely to abandon the CPEC.
• The $60 billion CPEC is now central to China-Pakistan’s “all weather” strategic partnership and bilateral free trade agreement.
• A large part of the CPEC is energy-related projects. The rest of the projects are in the road and railway infrastructure and Gwadar port.
• There has been some progress: the Sukkur-Multan section of the Peshawar-Karachi Motorway, the Havelian-Thakot section of the Karakoram Highway Phase II and the Lahore Orange Line Metro are operational.
• Many energy projects including coal-fired plants at Sahiwal, Port Qasim and Hub are also operational.
• Now, a few CPEC projects are also likely to be extended to Afghanistan.

India view on RBI

• India’s position on the BRI has remained relatively consistent since 2013.
• From the beginning, India had reservations about the BRI – mainly due to sovereignty-related issues, as the CPEC goes through the Pakistan-occupied Kashmir (PoK), and geopolitical implications of projects in the Indian Ocean.
• The importance of the Indian Ocean for China has increased significantly due to its expanding trade, energy transport and investments.
• It started expanding its footprints in India’s neighbourhood through investments in various ports in Bangladesh, Pakistan, Sri Lanka and Myanmar. As commercial ports could be easily converted into military use, these developments have troubled Indian policymakers and analysts.   
• China’s economic presence in India’s neighbourhood, including in South Asia, has already undergone substantial expansion. Moreover, many negative developments in broader India-China ties (trade deficit, border tensions, etc.) have also affected India’s perceptions of the BRI.
• While India has refrained from endorsing the BRI and has not taken part in any BRI Forums, it has been an active participant in the China-headquartered Asian Infrastructure Investment Bank (AIIB) since its inception.
• The Silk Road Fund (SRF) and the AIIB are the two main channels for BRI investment and financing.
• With about $10 billion in borrowing, which is about 20 per cent of AIIB’s total lending, India has emerged as a top market for the agency.
• For a long time, the world was used to the narrative of the rise and rise of China. In 2019, the Chinese economy was 42 times larger than what it was in 1980. In the last fifteen years, China was also a major contributor to global growth.
• As the economy matured, “going out” through the BRI was expected to provide another push for growth. Some slowdown in growth was already factored into the BRI strategy.
• However, current geopolitical tensions resulting in “decoupling’ or ‘de-risking’ measures by the US, Europe, and many others to reduce their own economic dependence on China might adversely affect the Chinese economy as well as BRI expansion. In the wake of these developments, China will have to re-strategize some of the BRI projects.

Challenges

• Undoubtedly, the BRI stands as President Xi’s most ambitious foreign policy endeavour.
• In 2017, he dubbed it the “project of the century” and it is a part of his long-term dream of a China-dominated world.
• Despite facing criticism, the BRI has already cultivated substantial diplomatic and geopolitical leverage for China within the Global South. The West is still scrambling to provide an alternative to the BRI in terms of infrastructure investments.
• Faced with a challenging geopolitical and economic landscape, China is now adjusting its ambitions, aiming to pivot towards green and smaller-scale development projects.
• Indeed, the success of other ambitious China-led diplomatic and economic plans, like the Global Security Initiative and the Global Development Initiative, hinges largely on the BRI’s success.

 Source- Indian Express