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Five years on, the BRI is still being perceived as a Debt Trap

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Five years since President Xi Jinping laid out his grand vision for the Belt and Road Initiative (BRI), the implications of China’s economic supremacy have brought about marked questions over the impacts of its rise as a potential global superpower. These questions apply particularly to whether China, based on its present trajectory, may soon supplant the US’s hold over the International System as it increasingly comes to challenge it.

China has gone to great lengths to distance itself from the US, in terms of its approach towards International Politics. A key cornerstone of its foreign policy has always been based on the principle of non-interference in the internal affairs of other States. This has often been presented as a direct anti-thesis to the long history of US led interventions witnessed across the Middle East, Latin America and key regions in Asia. Within the Post-Cold War scenario, China’s insistence on non-interference in the internal affairs of states, and greater inclusivity within the international system have served as a rallying cry against what many have termed as US Imperialism and unilateralism.

However, the many intricacies of China’s newfound ability to project power overseas have brought with them their own set of challenges in direct contradiction to the above principles. Powered by its massive economy, China’s investments under the BRI spanning across Europe, Africa, The Persian Gulf, and large swathes of Asia, have caused feverish speculation, amongst both proponents and critics alike, as to the true motives behind its financial largesse. China has repeatedly justified its investments in under-developed countries as part of its vision for global economic development. Yet, in whatever way China has maneuvered to ensure that these investments remain secure and true to their objectives, it has had to continuously ward off the perception that it is laying the foundations of a new form of imperialism of its own.

Particularly with respect to the BRI, these perceptions of Chinese Imperialism are rooted in what numerous analysts have termed as China’s ‘Debt Trap Diplomacy.’ Citing the cases of the Hambantota Port in Sri Lanka, the Bar-Boljare highway in Montenegro and the China Pakistan Economic Corridor (CPEC) in Pakistan, a growing number of critics have pointed out that, these projects while being funded through highly attractive and concessional loans from China are leading to unsustainable levels of debt for these countries. It is argued that with mounting debt in the guise of BRI funding, these countries would likely be reduced to being mere client states, with their sovereignty firmly in the grasp of Chinese creditors.

This issue of Chinese Debt was once again brought forcefully into the international spotlight, owing to a dramatic shift in Malaysia’s foreign policy towards China. The newly elected government under Mahathir Mohammad recently cancelled a series of large investment projects that were being implemented under the BRI framework. These comprised of the $20 billion East Coast Rail Link as well as two natural gas pipelines worth $2.3 billion. All of these projects were deemed as unaffordable by the new government based on the ensuing debt that would have followed.

Speaking at a press conference in the Great Hall of the People in Beijing, Prime Minister Mahathir stated clearly that he did not want a situation where there was a new version of colonialism based on unequal relations. His entire visit to China last week was geared towards delicately balancing Malaysian interests with respect to China’s sustained push towards realizing its BRI ambitions. He went at great lengths to lay the blame on his predecessor’s mismanagement of the economy, claiming he was confident that China would appreciate Malaysia’s present fiscal constraints, and its inability to afford such projects at this time.

It is worth noting that during the run-up to the Malaysian elections, Mr. Mahathir had centered his election campaign on calling for greater oversight over Chinese funding. This was based under widespread allegations of corruption regarding the mismanagement of BRI project funds under his predecessor Mr. Najib Razzak. Partisan politics aside, Mr. Mahathir’s statements bear a striking resemblance to the election rhetoric of another newly elected leader in yet another key BRI partner country.

On the other side of the Indian Ocean, the newly elected Prime Minister of Pakistan, Mr. Imran Khan too had campaigned for greater oversight over the management of BRI funds under the massive China Pakistan Economic Corridor (CPEC). These were part of a series of allegations leveled against his predecessor, former Prime Minister Nawaz Sharif who also is accused of widespread corruption and mismanagement of the economy. Pakistan’s rampant debt crisis has been attributed in part to Mr. Sharif’s mismanagement. Since assuming power Mr. Imran Khan has been delicately balancing increasing calls for greater transparency and oversight over CPEC projects, all while ensuring that the bonhomie between Pakistan and China remains intact.

The parallels between Prime Ministers Imran Khan and Mahathir Mohammad present a highly interesting comparison, specifically within the context laid out earlier in this discussion. Both politicians have more or less defined their political identity as being staunchly against the last few decades’ US imperialism. Both came in to power on a surging wave of populism, on the promise of fighting corruption and providing better oversight over the economic direction of their countries. Both while being initially skeptical of Chinese investments were quick to acknowledge and provide a reaffirmation of China’s role in National development. Mr. Khan’s direct appreciation of Chinese assistance in his speeches as well as his tweets in Chinese, directly point towards his attempts at alleviating Chinese suspicions regarding his commitment to the BRI. Mr. Mahathir’s visit to Beijing, as one of his first overseas visits as Malaysia’s newly elected Prime Minister, also present a similar story. By positively engaging with China immediately after assuming office, both leaders have attempted to directly address any misperceptions that may have arisen from their pre-election rhetoric.

Both leaders however, while whole-heartedly welcoming Chinese assistance have also taken a much more measured response in terms of ensuring that their own countries’ interests achieve precedence. Looming debt and the maintenance of sovereignty still remain at the forefront of their political agenda, regardless of the commitments made by past governments. That is still the crux of the message being delivered to China by both countries.

Speaking at a seminar, marking the Five Year Anniversary of the Belt & Road initiative in Beijing earlier this week, President XI Jinping was clear in asserting that the BRI was geared more towards economic cooperation as opposed to a geo-political or security alliance. He re-emphasized the openness and exclusivity of the BRI and dismissed allusions to the formation of a ‘China Club’, in a direct riposte to the BRI’s critics. While his speech shows that there is a growing acknowledgement of such challenges amidst China’s top leadership, there are still certain issues that need to be addressed more directly. No matter how much China depoliticizes the BRI at the international level, the stark reality of debt repayments still remains as the most pervasive issue for its partner countries. This holds true even for staunch allies such as Malaysia and Pakistan.

Taking into consideration its experience over the past five years, China should take a long hard look at how to decouple its Belt and Road Initiative from being perceived as a ‘Debt Trap’. While the BRI’s critics have been quick to equate this aspect as a key characteristic of growing Chinese Imperialism, its proponents are still facing difficulty in financially justifying the grand scale of the BRI to their impoverished constituencies.

If China is to truly chart a more inclusive path to global leadership via the BRI, it must let its diplomatic goodwill take precedence over the economic reality of being a creditor to it indebted allies. If not, it would likely lose its ability to stand in contrast to what itself refers to as the US’s imperialist hold over international politics; all, in spite of China’s strict adherence to its long cherished principles of ‘non-interference’, and respect for the sovereignty and territorial integrity of its allies.

Research Associate and Program Coordinator for the China Study & Information Centre (CS & IC) at the Strategic Vision Institute, a non-partisan think tank based out of Islamabad. He can be reached at waqas[at]thesvi.org

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East Asia

Importance of peace in Afghanistan is vital for China

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image source: chinamission.be

There are multiple passages from Afghanistan to China, like Wakhan Corridor that is 92 km long, stretching to Xinjiang in China. It was formed in 1893 as a result of an agreement between the British Empire and Afghanistan. Another is Chalachigu valley that shares the border with Tajikistan to the north, Pakistan to the south, and Afghanistan to the west. It is referred to as the Chinese part of the Wakhan Corridor. However, the Chinese side of the valley is closed to the public and only local shepherds are allowed. Then there is Wakhjir Pass on the eastern side of the Wakhan corridor but is not accessible to the general public. The terrain is rough on the Afghan side. There are no roads along the Wakhjir Pass, most of the terrain is a dirt track. Like other passages, it can only be accessed via either animals or SUVs, and also due to extreme weather it is open for only seven months throughout the year. North Wakhjir Pass, also called Tegermansu Pass, is mountainous on the border of China and Afghanistan. It stretches from Tegermansu valley on the east and Chalachigu Valley in Xinjiang. All of these passages are extremely uncertain and rough which makes them too risky to be used for trade purposes. For example, the Chalagigu valley and Wakhjir Pass are an engineering nightmare to develop, let alone make them viable.

Similarly, the Pamir mountain range is also unstable and prone to landslides. Both of these routes also experience extreme weather conditions. Alternatives: Since most of the passages are risky for travel, alternatively, trade activities can be routed via Pakistan. For example, there is an access road at the North Wakhjir that connects to Karakoram Highway.

By expanding the road network from Taxkorgan in Xinjiang to Gilgit, using the Karakoram Highway is a probable option. Land routes in Pakistan are already being developed for better connectivity between Islamabad and Beijing as part of CPEC. These routes stretch from Gwadar up to the North.

The Motorway M-1, which runs from Islamabad to Peshawar can be used to link Afghanistan via Landi Kotal. Although the Karakoram highway also suffers from extreme weather and landslides, it is easier for engineers to handle as compared to those in Afghanistan.

China is the first door neighbor of Afghanistan having a common border. If anything happens in Afghanistan will have a direct impact on China. China has a declared policy of peaceful developments and has abandoned all disputes and adversaries for the time being and focused only on economic developments. For economic developments, social stability and security is a pre-requisite. So China emphasizes peace and stability in Afghanistan. It is China’s requirement that its border with Afghanistan should be secured, and restrict movements of any unwanted individuals or groups. China is compelled by any government in Afghanistan to ensure the safety of its borders in the region.

Taliban has ensured china that, its territory will not use against China and will never support any insurgency in China. Based on this confidence, China is cooperating with the Taliban in all possible manners. On the other hand, China is a responsible nation and obliged to extend humanitarian assistance to starving Afghans. While, the US is coercing and exerting pressures on the Taliban Government to collapse, by freezing their assets, and cutting all economic assistance, and lobbying with its Western allies, for exerting economic pressures on the Taliban, irrespective of human catastrophe in Afghanistan. China is generously assisting in saving human lives in Afghanistan. Whereas, the US is preferring politics over human lives in Afghanistan.

The US has destroyed Afghanistan during the last two decades, infrastructure was damaged completely, Agriculture was destroyed, Industry was destroyed, and the economy was a total disaster. While, China is assisting Afghanistan to rebuild its infrastructure, revive agriculture, industrialization is on its way. Chinese mega initiative, Belt and Road (BRI) is hope for Afghanistan.

A peaceful Afghanistan is a guarantee for peace and stability in China, especially in the bordering areas. The importance of Afghan peace is well conceived by China and practically, China is supporting peace and stability in Afghanistan. In fact, all the neighboring countries, and regional countries, are agreed upon by consensus that peace and stability in Afghanistan is a must and prerequisite for whole regions’ development and prosperity.

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East Asia

Shared Territorial Concern, Opposition to US Intervention Prompt Russia’s Support to China on Taiwan Question

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image credit: kremlin.ru

The situation around the island of Taiwan is raising concerns not only in Chinese mainland, Taiwan island or in the US, but also in the whole world. Nobody would like to see a large-scale military clash between China and the US in the East Pacific. Potential repercussions of such a clash, even if it does not escalate to the nuclear level, might be catastrophic for the global economy and strategic stability, not to mention huge losses in blood and treasure for both sides in this conflict.

Earlier this week, Russian Foreign Minister Sergey Lavrov stated that Moscow continued to firmly support Beijing’s position on Taiwan as an integral part of China. Moreover, he also underlined that Moscow would support Beijing in its legitimate efforts to reunite the breakaway province with the rest of the country. A number of foreign media outlets paid particular attention not to what Lavrov actually said, but omitted his other remarks: the Russian official did not add that Moscow expects reunification to be peaceful and gradual in a way that is similar to China’s repossession of Hong Kong. Many observers of the new Taiwan Straits crisis unfolding concluded that Lavrov’s statement was a clear signal to all parties of the crisis: Russia would likely back even Beijing’s military takeover of the island.

Of course, diplomacy is an art of ambiguity. Lavrov clearly did not call for a military solution to the Taiwan problem. Still, his remarks were more blunt and more supportive of Beijing than the standard Russia’s rhetoric on the issue. Why? One possible explanation is that the Russian official simply wanted to sound nice to China as Russia’s major strategic partner. As they say, “a friend in need is a friend indeed.” Another explanation is that Lavrov recalled the Russian experience with Chechnya some time ago, when Moscow had to fight two bloody wars to suppress secessionism in the North Caucasus. Territorial integrity means a lot for the Russian leadership. This is something that is worth spilling blood for.

However, one can also imagine that in Russia they simply do not believe that if things go really bad for Taiwan island, the US would dare to come to its rescue and that in the end of the day Taipei would have to yield to Beijing without a single shot fired. Therefore, the risks of a large-scale military conflict in the East Pacific are perceived as relatively low, no matter what apocalyptic scenarios various military experts might come up with.

Indeed, over last 10 or 15 years the US has developed a pretty nasty habit of inciting its friends and partners to take risky and even reckless decisions and of letting these friends and partners down, when the latter had to foot the bill for these decisions. In 2008, the Bush administration explicitly or implicitly encouraged Georgian leader Mikheil Saakashvili to launch a military operation against South Ossetia including killing some Russian peacekeepers stationed there. But when Russia interfered to stop and to roll back the Georgian offensive, unfortunate Saakashvili was de-facto abandoned by Washington.

During the Ukrainian conflicts of 2013-14, the Obama administration enthusiastically supported the overthrow of the legitimate president in Kiev. However, it later preferred to delegate the management of the crisis to Berlin and to Paris, abstaining from taking part in the Normandy process and from signing the Minsk Agreements. In 2019, President Donald Trump promised his full support to Juan Guaidó, Head of the National Assembly in Venezuela, in his crusade against President Nicolas when the government of Maduro demonstrated its spectacular resilience. Juan Guaido very soon almost completely disappeared from Washington’s political radar screens.

Earlier this year the Biden administration stated its firm commitment to shouldering President Ashraf Ghani in Afghanistan in his resistance to Taliban advancements. But when push came to shove, the US easily abandoned its local allies, evacuated its military personal in a rush and left President Ghani to seek political asylum in the United Arab Emirates.

Again and again, Washington gives reasons to conclude that its partners, clients and even allies can no longer consider it as a credible security provider. Would the US make an exception for the Taiwan island? Of course, one can argue that the Taiwan island is more important for the US than Afghanistan, Venezuela, Ukraine and Georgia taken together. But the price for supporting the Taiwan island could also be much higher for the US than the price it would have paid in many other crisis situations. The chances of the US losing to China over Taiwan island, even if Washington mobilizes all of its available military power against Beijing, are also very high. Still, we do not see such a mobilization taking place now. It appears that the Biden administration is not ready for a real showdown with Beijing over the Taiwan question.

If the US does not put its whole weight behind the Taiwan island, the latter will have to seek some kind of accommodation with the mainland on terms abandoning its pipe-dreams of self-determination and independence. This is clear to politicians not only in East Asia, but all over the place, including Moscow. Therefore, Sergey Lavrov has reasons to firmly align himself with the Chinese position. The assumption in the Kremlin is that Uncle Sam will not dare to challenge militarily the Middle Kingdom. Not this time.

From our partner RIAC

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East Asia

Russia-Japan Relations: Were Abe’s Efforts In Vain?

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Expanding the modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward.

One year after the end of Shinzo Abe’s long period of leadership, Japan has a new prime minister once again. The greatest foreign policy challenge the new Japanese government led by Fumio Kishida is facing is the intensifying confrontation between its large neighbor China and its main ally America. In addition to moves to energize the Quad group to which Japan belongs alongside Australia, India, and the United States, U.S. President Joe Biden’s administration has concluded a deal with Canberra and London to provide Australia with nuclear-powered submarines which in future could patrol the Western Pacific close to Chinese shores. The geopolitical fault lines in the Indo-Pacific region are fast turning into frontlines.

In this context, does anything remain of the eight-year-long effort by former prime minister Abe to improve relations with Russia on the basis of greater economic engagement tailored to Moscow’s needs? Russia’s relations with China continue to develop, including in the military domain; Russia’s constitutional amendments passed last year prohibit the handover of Russian territory, which doesn’t bode well for the long-running territorial dispute with Japan over the South Kuril Islands; and Russian officials and state-run media have been remembering and condemning the Japanese military’s conduct during World War II, something they chose to play down in the past. True, Moscow has invited Tokyo to participate in economic projects on the South Kuril Islands, but on Russian terms and without an exclusive status.

To many, the answer to the above question is clear, and it is negative. Yet that attitude amounts to de facto resignation, a questionable approach. Despite the oft-cited but erroneous Cold War analogy, the present Sino-American confrontation has created two poles in the global system, but not—at least, not yet—two blocs. Again, despite the popular and equally incorrect interpretation, Moscow is not Beijing’s follower or vassal. As a power that is particularly sensitive about its own sovereignty, Russia seeks to maintain an equilibrium—which is not the same as equidistance—between its prime partner and its main adversary. Tokyo would do well to understand that and take it into account as it structures its foreign relations.

The territorial dispute with Russia is considered to be very important for the Japanese people, but it is more symbolic than substantive. In practical terms, the biggest achievement of the Abe era in Japan-Russia relations was the founding of a format for high-level security and foreign policy consultations between the two countries. With security issues topping the agenda in the Indo-Pacific, maintaining the channel for private direct exchanges with a neighboring great power that the “2+2” formula offers is of high value. Such a format is a trademark of Abe’s foreign policy which, while being loyal to Japan’s American ally, prided itself on pursuing Japanese national interests rather than solely relying on others to take them into account.

Kishida, who for five years served as Abe’s foreign minister, will now have a chance to put his own stamp on the country’s foreign policy. Yet it makes sense for him to build on the accomplishments of his predecessor, such as using the unique consultation mechanism mentioned above to address geopolitical and security issues in the Indo-Pacific region, from North Korea to Afghanistan. Even under Abe, Japan’s economic engagement with Russia was by no means charity. The Russian leadership’s recent initiatives to shift more resources to eastern Siberia offer new opportunities to Japanese companies, just like Russia’s early plans for energy transition in response to climate change, and the ongoing development projects in the Arctic. In September 2021, the annual Eastern Economic Forum in Vladivostok did not feature top-level Japanese participation, but that should be an exception, not the rule.

Japan will remain a trusted ally of the United States for the foreseeable future. It is also safe to predict that at least in the medium term, and possibly longer, the Russo-Chinese partnership will continue to grow. That is no reason for Moscow and Tokyo to regard each other as adversaries, however. Moreover, since an armed conflict between America and China would spell a global calamity and have a high chance of turning nuclear, other major powers, including Russia and Japan, have a vital interest in preventing such a collision. Expanding the still very modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward. The absence of a peace treaty between the two countries more than seventy-five years after the end of the war is abnormal, yet that same unfinished business should serve as a stimulus to persevere. Giving up is an option, but not a good one.

From our partner RIAC

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