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ROZDZIAŁ 2
SAROJ KUMAR ARYAL1
ABSTRACT
China’s Belt and Road Initiative (BRI) has received a mixed response since its
announcement in 2013. On a positive note, BRI’s attempt to contribute in the
infrastructure needs of the developing countries has been discussed in academia.
However, it has also been associated with large scale corruption, non-transparency
during project selection & implementation and implementation, and China’s interest
in developing countries. Therefore, this chapter attempts to analyze the pattern
of China’s BRI, paying special attention to Sri Lanka and Pakistan. As this is
a qualitative study, the paper has used primary and the secondary sources to make
arguments and draw a conclusion.
INTRODUCTION
China’s Belt and Road Initiative (BRI) has received mixed responses from international
community since its implementation in 2013. Considering the excessive need for
infrastructures in developing countries, the BRI highly relevance. But at the same
time, the project has drawn various controversies. On the one hand, China has failed
to effectively communicate the BRI and its implementation strategy to the outside
world in its early stages. China has primarily engaged with government authorities,
1 Saroj Kumar Aryal is a PhD researcher at Faculty of Political Science and International Studies,
University of Warsaw. Krakowskie Przedmieście 26/28, 00-927 Warsaw, Poland. Email: sk.aryal@
uw.edu.pl. ORCID: http://orcid.org/0000-0001-5094-3590.
28 Część 1
with little regard for the interests of enterprises, civil society organizations, and local
communities. On the other hand, China’s readiness to follow international laws and
processes for these investments has been overshadowed by its desire to shape norms
to its advantage. Whether one thinks BRI development is important or not, China is
poised to take advantage of development-like deals to expand its worldwide presence
and influence. Likewise, evidences support that China entices weaker countries to
take out loan after loan to build expensive infrastructure that they cannot afford and
that will provide few advantages, all with the purpose of Beijing eventually seizing
control of these assets from its distressed borrowers. As a result, the project caused
a great deal of concern about transparency and the corruption associated with it
(Cordell 2020).
There are three types of corruption, according to Transparency International’s
corruption perception index: grand corruption, medium corruption, and piety
corruption. Government officials are directly or indirectly involved in great corruption.
Individuals are active in piety corruption to utilize their power for personal benefits,
whereas government and private entities use their links for personal incentives in
medium corruption. Corrupt politicians in underdeveloped nations may be to blame
for allocating additional public properties on those items for which it is more discreet
to charge large inducements and keep them secret. Although there have been slight
advances in short-term accounting of China’s transactions by local governments, a
new study from the Center for Global Development (CGD) demonstrates that Chinese
support remains insufficiently matched to “national objectives and priorities” in
the long run. This strategic misalignment exemplifies the vision of China helping.
Similarly, other bilateral donors, who are unsure how to engage China in development,
point to a lack of adequate data and a general disregard for international standards
and practices. The current approaches - contain, collaborate, or compete — lack
the nuance required to respond to BRI’s ever-changing shape. This conflict is likely
most evident in developing nations, where national governments are sandwiched
between donors with varying agendas, many of which are focused on their own
national political goals (Morris et al. 2020). The US and other “like-minded” donors
were eager to influence the growing Chinese model through capacity building and
advocacy for good donor norms as part of the development effectiveness discussions
in capitals. However, donors, conferences, and capacity workshops did not cause
a standstill in BRI transactions. Instead, new large-scale infrastructure projects
have been implemented in a way that challenges donor transparency and global
development principles from Sri Lanka to Djibouti.
Saroj Kumar Aryal – BELT AND ROAD INITIATIVE (BRI)... 29
1. WHAT IS ‘BRI’?
The People’s Republic of China’s Belt and Road Initiative (BRI) is a strategy that
aims to connect Asia with Africa and Europe via land and sea networks in order to
improve regional integration, increase commerce, and stimulate economic growth.
During his visit to Kazakhstan in September 2013, Chinese President Xi Jinping
urged the creation of a new regional cooperation model by jointly building the ‘Silk
Road Economic Belt’. A month later, President Xi pushed for the establishment and
development of the Asian Infrastructure Development Bank (AIIB) in Indonesia,
dubbed the ‘21st Century Maritime Silk Route’. The One Belt and One Road (OBOR)
initiative is the formal name for the BRI concepts. The idea was put into the broad
reform plan announced by the party leadership in November 2013 as a significant
political objective by 2020 (Huang 2016).
Primarily, the BRI have five main objectives; i) policy coordination; ii)
infrastructure connectivity; iii) unimpeded trade; iv) financial integration; and v)
connecting people. In a more elaborated term, first, China’s Belt and Road Initiative
is an important step in the country’s attempt to increase international business
collaboration with new partners in order to maintain its economic growth. During
the first three decades of economic reform, China saw extremely rapid growth, due
to a large shift in exports from developed economies to foreign direct investment
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(FDI). Second, China aspires to maintain a larger global effect by merging some of
its knowledge and contributing to the international economic architecture through
the Belt and Road Initiative. China, as a rising power, has shown a willingness to
assume greater responsibilities of international economic governance. The Chinese
government wants to play a key role in shaping the global economic system through
the newly established AIIB and the BRI. Similarly, the BRI’s main goal is to reduce
tensions and build reciprocal trust with neighbouring countries to ensure that
China’s progress occurs in a peaceful environment (Zhang 2018). Third, BIR has
been developed in such a way that it can meet a large portion of the infrastructure
needs of emerging countries. The reach is far broader, encompassing policy debates,
infrastructure connections, unrestricted commerce, financial support, and people-
to-people encounters. Infrastructure will undoubtedly play a significant role in
boosting regional collaboration and development, especially in the early stages of
the Initiative, given China’s own experience with economic growth.
However, in contrast, some studies have tried to define the real objective of China
within the framework of the BRI. Cheng (2016) argues that China wants to conquer
global markets by opening up emerging and developing economies’ marketplaces
in order to address i) China’s excess production capacity; (ii) insufficient Chinese
domestic demand; and (iii) a bottleneck in further growing saturated export markets
in developed economies. Likewise, presenting the context of BRI in Central Asia,
Aryal (2021) argued that BRI aim to make direct investment in these countries,
thereby securing the supply of resources, particularly in the natural resource sector;
it is a new phase of China’s “going global” policy, which was officially declared in
2002 after Western countries frequently stifled China’s outward investment initiative
by erecting various barriers to takeovers, mergers and acquisitions, and greenfield
investment. Similarly, BRI targets to extend China’s global strategy of boosting
Renminbi (RMB) internationalization by utilizing RMB as part of excess foreign
reserves. It is a friendship-building strategy inspired by geopolitical ambitions to
develop the diplomatic relationship with and increase China’s popularity among
partner countries. Gong (2020) also argued that it aims to fight the economic parts
of the United States’ geopolitical “Pivot to Asia” policy, which includes the Trans-
Pacific Partnership (TPP) free-trade deal, which appears to exclude China officially
and purposely.
Having said that, BRI have raised the macro-level suspicion on China’s interest
international interest and the weaponization of economy as a geopolitical tool. On
the other hand, BRI has raised many micro level concerns related to corruption and
transparency as well.
Saroj Kumar Aryal – BELT AND ROAD INITIATIVE (BRI)... 31
Although BRI involves megaprojects that can change the course of infrastructure-
related struggle that many developing countries are having, the projects equally raise
many questions of the China objective, transparency during the implementation of
projects, and China’s relations with corrupt leader & weak governments around the
world. In addition, in the United States and its main allies, the project is viewed
with mistrust, primarily as debt trap diplomacy, a predatory, opaque operation, and a
threat to Western interests.
The international community has conflicting feelings about this initiative.
Some compare it to America’s post-World War II Marshall Plan, while others see
it as a platform for international economic cooperation rather than foreign aid.
Some see it as evidence of China’s desire to eventually replace America’s global
economic architecture by exporting the so-called “China model,” while others see
opportunity for cooperation between the Chinese endeavor and the existing system
(Shen & Chan 2018). Furthermore, while many countries in the Belt & Road region
applaud China’s efforts to promote regional cooperation and development, some
are concerned about the potential negative impact on their domestic economies if
China begins to export its massive excess capacity, particularly in steel, non-ferrous
metals, building materials, coal, and shipbuilding. Likewise, a popular narrative
has emerged about how the BRI represents broader Chinese “predatory lending”,
the use of geo-economic power for geopolitical goals. Former assistant secretary
of the US Treasury for International Affairs and 15 other US Senators expressed
concerns about Chinese lending in a public letter (dated 3 August 2018 addressed to
the US Secretary of State for the Treasury and the US Secretary of State). The letter
mostly concerns China’s attempt to weaponize the capital in Asia, Africa, and even
Europe. China’s unregulated lending has been coined as ‘Debt-Trap Diplomacy’ in
academia.
Similarly, during a recent interaction at the Woodrow Wilson Center in
Washington, DC, Alice Wells, Principal Deputy Assistant Secretary of State for
South and Central Asia at the US Department of State, argued that the BRI lacks
transparency, and large borrowings from China are likely to lead not only to
unsustainable debts, but also to excessive dependence on Beijing. Wells supported
her case by citing BRI initiatives in South Asia, Africa, and Southeast Asia. The
foregoing facts were discussed in great depth in an earlier paper issued by the Center
for Global Development in 2018, titled ‘Examining the Debt Implications of the
Belt and Road Initiative from a Policy Perspective (Maini & Lingala 2019). Crabtree
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(2019) argued that, despite its vast scope, there is no reliable list of BRI projects, no
disclosure of China’s lending rules, and no information on the amount of money it
has invested. Beijing claims more than $1 trillion in assets; independent estimates
put the figure at a few hundred billion. In any case, China will struggle to convince
debt skeptics unless it is transparent about the criteria it uses to decide who to lend to
and why. For instance, for European companies interested in participating in China’s
Belt and Road Initiative, a lack of information and openness are major roadblocks.
The major impediments highlighted by European corporations in the report were a
lack of contract information and “nontransparent” procurement methods (Bangkok
Post 2020).
Concerns about China’s donor practices have arisen as a result of the influx
of Chinese donations. According to critics, Beijing utilizes development funding to
form ties with leaders of developing countries, obtain economic benefits for home
enterprises, and support corrupt and undemocratic regimes to get access to their
natural resource endowments. On the other hand, when engaging with China, state
actors in focal nations have used their agency (government or power) to protect their
national interests. However, in most situations, state administrations have drawn
China closer because they perceive clear benefits in cooperating: China can provide
domestic political advantage ahead of elections, as well as providing public works
and other benefits to constituents (Pal 2021). A study made by university of Toronto
has revealed how different stages of project implementation of BRI have promoted
corruption in developing countries. For example, consider the infamous instance
of TBEA, a Chinese company that was given a contract to refurbish a power plant
in Bishkek, Kyrgyzstan, but failed, leaving part of the Kyrgyz city without power
and heat in the winter of 2018. Despite the fact that other competitors, including an
experienced Russian firm, had submitted lower-cost bids, the company received the
$400 million contract, according to a commission probe. Sapar Isakov, the former
Kyrgyzstan prime minister, was later tried and convicted of manipulating the TBEA
contract. Former Kyrgyz Prime Minister Temir Sariyev resigned in April 2016 after
being accused of fraudulently granting a $100 million motorway contract to a Chinese
firm just a few years earlier (Cooley 2021). While the tender procedure is the most
visible source of possible bribes, later stages of the construction process also provide
opportunities for collusion and graft. This is particularly dangerous in large-scale
construction projects because sourcing and subawards can provide rich opportunities
for kickbacks and theft. The operation of an infrastructure project, once established,
provides an opportunity for both rent-seeking and regulatory-related misconduct.
Saroj Kumar Aryal – BELT AND ROAD INITIATIVE (BRI)... 33
thousands of acres of land in a Gwadar industrial zone. In summary, CPEC was also
beset by stalled projects, allegations of corruption, and terrorist attacks. A Pakistani
government commission found that Chinese contractors overcharged Islamabad by
$3 billion on two CPEC power stations, and claims surfaced those Chinese investors
were promised substantial annual returns (Sacks 2021).
was later discovered that the hidden deals inked by Chinese corporations during
the Rajapaksa era featured various undesirable clauses, including handing China
sovereign sovereignty over property near Sri Lanka’s ports. The administration of
Sirisena-Wickremensinghe later rejected them and renegotiated them.
CONCLUSION
The academic discourse and the case study on the implementation of Belt and Road
Initiative (BRI) project led to few conclusions. First, there is a clear problem with
the intention associated with BRI. On the one hand, China portrays the project as
an attempt to connect the world trade system easily and quickly. Looking at the
scale and megaproject involved within BRI, if succeeded, it will contribute to the
world trade system and the infrastructure need of developing countries. However,
the western world has accused China’s BRI as a tool to exert its assertive policy in
developing countries.
Secondly, the BRI has been associated with massive cases of corruption, no
transparency, and ‘debt trap’. Through the case studies presented above, it is certain
that there are many allegations of corruption and transparency. Likewise, both Sri
Lanka and Pakistan are going through ‘debt crises’. However, instead of making
conclusion that BRI promoting corruption in developing countries, this study finds
that BRI intentionally involved with governments who already are associated with
corruption and no transparency attributes in their governance.
However, there is huge infrastructure demand in developing countries, which can
only can be fulfilled with the intervention of an external actor. Therefore, it is clear
that China is seizing the opportunity by investing in infrastructure and associating
its interest with the BRI. For example, the author has done a geo-economic study of
China’s involvement in Central Asia, where China have managed to acquire strategic
business opportunities in the region. However, developing countries must be aware
regarding the transparency, excessive debt, and the possible collusion between the
Chinese company and government officials while signing or implementing the
projects related to BRI.
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STRESZCZENIE
Chińska inicjatywa Belt and Road Initiative (BRI) spotkała się z mieszanymi odpowiedziami
od czasu jej ogłoszenia w 2013 roku. Próba wniesienia przez BRI wkładu w potrzeby
infrastrukturalne krajów rozwijających się była dyskutowana z pozytywnym akcentem
w środowisku akademickim. Wiąże się to jednak również z korupcją na dużą skalę,
nieprzejrzystością podczas wyboru, wdrażania projektów oraz zainteresowaniem Chin
krajami rozwijającymi się. Dlatego w niniejszym rozdziale podjęto próbę analizy wzorca
chińskiego BRI, zwracając szczególną uwagę na Sri Lankę i Pakistan. Ponieważ jest
to badanie jakościowe, wykorzystano źródła pierwotne i wtórne, aby przedstawić argumenty
i wyciągnąć wnioski.