After Complaints, China Moves to Make Belt And Road Plan Greener

A commentary by Dan Southerland
2019-08-02
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China's President Xi Jinping speaks at a press briefing at the end of the final day of the Belt and Road Forum at the China National Convention Centere at the Yanqi Lake venue outside Beijing, April 27, 2019.
China's President Xi Jinping speaks at a press briefing at the end of the final day of the Belt and Road Forum at the China National Convention Centere at the Yanqi Lake venue outside Beijing, April 27, 2019.
AFP

In a positive development, China has pledged at the highest level to make its massive Belt and Road Initiative (BRI) friendlier to the environment.

The overseas infrastructure project formerly called the One Belt, One Road program currently spans more than 70 countries. Chinese investments in the project are eventually expected to rise to a total of $1 trillion.

If fully funded, the project will also reach more than 120 countries encompassing more than two-thirds of the world’s population. On July 22, The New York Times described it as “a colossal infrastructure program designed to link China with Asia, Africa, and Europe.”

In an article published on May 1, the science journal Nature describes the BRI as “the single largest project to build infrastructure worldwide since the Marshall Plan to rebuild Europe after the Second World War.”

Harking back to China’s Han Dynasty trade routes linking East and West, President Xi himself once described the BRI as a new economic “Silk Road.”

A network of roads, railway lines, and ports has been designed to ship goods to the 126 countries with which China has signed cooperation agreements under the project.

The best way to understand the project might be to briefly mention the most positive recent development, which is China’s pledge to maintain environmental stability, and then move on to the critics’ most recent concerns about the project.

The Belt and Road Initiative, President Xi’s signature foreign policy initiative, is often referred to as the BRI.

It’s important first to acknowledge the accusations that the BRI ensnares many developing countries in “debt traps” which entail predatory loans used to finance questionable infrastructure projects. Much recent worldwide commentary has focused on this issue.

But the environmental impact sometimes gets overlooked.

In an address delivered in late April this year, China’s President Xi Jinping stressed a commitment to the BRI’s environmental sustainability.

Xi was speaking at a Beijing forum attended by leaders from 37 countries.

But if recent Chinese history is any indication, including when it comes to the BRI, pledges can be one thing but effective implementation another.

As Jane Nakano from the Washington, D.C.-based Center for Strategic and International Studies (CSIS) notes, Xi’s address and a Belt and Road Progress Report issued before the forum both “fell short of introducing concrete steps to correct its high-carbon financing practices.”

But on the positive side, China is seeking more international and private financing for the BRI in order to counter concerns over possible debt traps.

On April 25, Lucy Hornby of the Financial Times, reporting from Beijing, quoted Yi Gang, China’s central bank governor, as saying that China will address the ability of host nations to service their borrowing.

Yi spoke to an audience of finance professionals at the Belt and Road Forum that included Christine Lagarde, the IMF chief.

The best way to understand the BRI’s overall scope might be to start with a brief but broad description of its various projects and then come back to the environmental impact and critics’ wide-ranging concerns.

The construction of a toll road from the Indonesian capital Jakarta to Lido, in West Java province, a project in China's globe-spanning Belt and Road infrastructure project, November 2, 2017.
The construction of a toll road from the Indonesian capital Jakarta to Lido, in West Java province, a project in China's globe-spanning Belt and Road infrastructure project, November 2, 2017. AFP
Environmental concerns

While describing the vast scope of the BRI and its potentially positive as well as negative economic impact, analysts sometimes overlook its potentially negative environmental impact.

Six months ago this commentator reported that scientists and environmentalists at a research center in Portugal were warning that the global infrastructure initiative could cause permanent environmental damage unless it’s carefully handled.

They argued that the exploitation of oil and gas reserves throughout the BRI would mean an increased dependence on fossil fuel and high greenhouse gas emissions.

Problems in monitoring the BRI’s implementation could arise, meanwhile, from a lack of transparency among some of the Chinese banks and state-owned companies which are charged with financing and then building and servicing much of the infrastructure.

Another concern in some countries has been the use of Chinese workers to the exclusion of local workers to carry out the construction work and other tasks involved.

Many of the most recent complaints about the BRI have focused on the “debt trap” issue, with high-level U.S. officials accusing China of pursuing “debt trap diplomacy.”

But as Gerard Gayou explained recently in The Wall Street Journal, where he is an assistant editorial page writer, it would undermine China’s quest for global influence to ensnare developing nations in “predatory loan terms for dubious projects.”

As Gayou notes, Pakistan, the Maldives, Sri Lanka, and Tajikistan have “swelling budgets” thanks to Chinese loans. When Sri Lanka couldn’t repay its debt, a Chinese firm took out a 99-year lease on the strategic Hambantota harbor.

But Gayou says that such outcomes aren’t in China’s financial interest, and “new evidence demonstrates Beijing has a strong preference for renegotiation when partner countries get into the red.”

Hornby’s April 25 The Financial Times report from Beijing said that China is seeking more international and private financial for the BRI “to counter concerns that the infrastructure project can create debt traps for host countries.”

High-level attention but some failures inevitable

It appears that President Xi Jinping has become aware of many of the complaints about the BRI. Representatives of the 37 countries who attended the Beijing Forum in April no doubt politely informed him of some of the complaints, which have brought pushback from some of these leaders’ own citizens.

Sometimes conditions in host countries are such that projects simply bog down.

Take for example, the ambitious Nepal-China rail link, which was expected to break the small Himalayan nation’s dependence on India for trade and transportation.

Writing for the Hong Kong-based Asia Times two weeks ago, the Nepalese journalist Kosh Raj Koirala reported that the rail project “is looking financially unfeasible as disagreements crop up between principal stakeholders.”

Andrew Higgins, a veteran New York Times correspondent, reported recently on a case where everything that could go wrong went wrong with a BRI project in the Central Asian nation of Kyrgyzstan.

Kyrgyz officials were weighing rival bids to reconstruct a power plant that broke down after a Chinese company overhauled it. The aging plant provided nearly all of the heat and electricity for Bishkek, the nation’s capital.

The Chinese embassy in Bishkek “recommended” that Kyrgyzstan choose TBEA, a Chinese company with modest experience in building and repairing power stations, to rebuild the plant.

China was also planning to provide a major loan to Kyrgyzstan but made it clear that final approval for the loan would depend on a Kyrgyz decision to go with TBEA.

But as Higgins described it, the Kyrgyz decision to choose TBEA over a far more experienced Russian company “led to disaster.”

Soon after the Chinese contractor completed the power plant overhaul last year, the plant broke down, leaving Bishkek in freezing weather without heat or electricity.

“The public outcry and a trial underway in Bishkek have exposed Chinese business practices and local corruption to months of intense scrutiny from Kyrgyzstan’s boisterous news media and elected politicians,” Higgins concluded in a report published on July 7.

A lack of transparency on the Chinese side combined with weak oversight in host countries, such as Kyrgyzstan, can lead to corruption.

According to a recent report from the Financial Times’ Don Weiland in Beijing, China now plans to deal with corruption by embedding in the host countries inspectors from the Chinese Communist Party’s Central Commission for Discipline Inspection.

Japan’s interest in Asian infrastructure projects

According to Tokyo University Professor Asei Ito, China is now not only beginning to address concerns about the BRI’s environment impact and the “debt trap” issues but also has begun welcoming international cooperation in the initiative.

In a paper prepared for the Association of Japanese Institutes of Strategic Studies published on July 18, Professor Ito wrote that the BRI organizers will share satellite information, create a “Digital Belt and Road,” including data distribution, and a “Silk Road on Ice” linked to China’s policies in the Arctic.

An “Action Plan for Harmonization of Standards Along the Belt and Road” will seek to formulate “international standards for 13 industrial sectors.”

Professor Ito argues that China is now planning what it calls a “High Quality Belt and Road Initiative” because of new economic, political, and international developments. These include U.S.-China trade frictions and accusations that the BRI creates debt traps.

Chinese officials began in 2018 to emphasize the high-quality theme, which “suddenly became a keyword at the second Belt and Road Forum for International Cooperation in 2019.”

Experts from Japan and other countries have complained in the past about a lack of transparency among Chinese banks and state-owned companies charged with financing and then building and servicing much of the infrastructure.

Gillian Tett, the finance columnist for the Financial Times, wrote early this month that it’s striking how “really chaotic and opaque this debt binge has been, since the loans are issued by competing Chinese agencies and state-owned enterprises.”

Many parts of the BRI hardly add up to the well-connected master plan for economic dominance that some foreign observers fear may be the case.

In Southeast Asia, for example, it’s important to remember that China faces strong competition from Japan. Like China, Japan provides infrastructure in Southeast Asia, which has developed into an arena for competition between the two countries for new projects.

Indonesia’s best known BRI project is a much-delayed $6 billion Jakarta to Bandung high-speed rail line. Competing with Japan, China won in its bid to build the rail line.

Construction finally began last year after three years of disputes over land ownership disputes, Reuters reported.

But Prashant Parameswaran, a correspondent for the Tokyo-based online magazine The Diplomat concluded earlier this month that “the reception of the BRI has in fact been mixed in Southeast Asia thus far.”

Indonesia requires that Chinese investors gain approval for new projects only if they use Indonesian workers, provide environmentally friendly technology, and allow a transfer of the technology to Indonesia. This could be a model for a number of other nations.

Dan Southerland is RFA’s founding executive editor.

CH. 1: MANDARIN | CANTONESE

CH. 2: VIETNAMESE | BURMESE | KOREAN

CH. 3: KHMER | LAO | UYGHUR

CH. 4: TIBETAN

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