Road blocks loom for China’s great initiative

The current stand-off between China and the United States over trade presents a breathing space, and possibly an opportunity, for India to solidify its position in the Asian power game being played out between the two giant nations.

For the moment at least Beijing’s attention is fixed westward, angered by President Donald Trump’s increasingly protectionist stance, struggling to moderate its mercurial neighbour, North Korea, and with an inevitable eye on the manoeuvres of its ‘renegade province’, Taiwan.

This means that, for the moment at least, the momentum is off China’s much heralded Belt and Road Initiative (BRI), which New Delhi believes is actually a not so subtle attempt to isolate it by turning its near neighbours into compliant client States.

In fact BRI is currently giving China more headaches than advantages. Clumsy attempts to cajole countries into paying for much of the infrastructure needed for the project have forced many into significant indebtedness to Beijing.

This has led to increased anti-China sentiment among local populations, a questioning of China’s real intentions and a growing feeling that Beijing is not the benevolent provider of largesse it has been trying to portray.

As Shahidul Haque, the Foreign Minister of Bangladesh, one of the BRI’s prime targets, pointed out: “There is a need to balance economic integration with sovereignty”.

As if to emphasise this, Bangladesh cancelled a Chinese project to develop a new port at Sonadia in favour of a Japanese offer of a similar project at Matarbari just 25 kilometres away.

This has delighted the Government in New Delhi which viewed Sonadia has a key part of the ‘string or pearls’ strategy to encircle India in its own maritime backyard, as well as threatening its position on the nearby Andaman and Nicobar islands.

However, Bangladesh is just one nation which is beginning to have doubts about the BRI. A report from the Washington-based Centre for Global Development says eight of the 68 countries involved in the project are in grave financial difficulties because of it, with another 15 “significantly or highly vulnerable to debt distress”. 

“Djibouti already owes 82 per cent of its foreign debt to China, while China is expected to account for 71 per cent of Kyrgyzstan’s debt as BRI projects are implemented,” the report stated.

“There is concern that debt problems will create an unfavourable degree of dependency on China as a creditor. Increasing debt, and China's role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI countries,” the report continued.

These and other concerns are the subject of intense focus in New Delhi. Realists in the Government of Narendra Modi know that it will be many years before India has the economic and military strength to challenge China, and in the meantime it has to rely on others — and Beijing’s own missteps — while it gets on with the business of catching up. With a little help from its friends this strategy may produce the required results.