China renews its “belt and road” momentum by global influence

BEIJING – China’s great effort to build ports, rail lines and telecommunications networks around the world, and increase Beijing’s political dominance in the process, seemed to be running out of gas just a year ago.

Now the program, called the Belt and Road Initiative, has returned strongly. Western officials and companies, meanwhile, are renewing their warnings that China’s profits in business and political influence could be at their expense.

Chinese companies signed Belt and Road contracts worth almost $ 128 billion in the first 11 months of last year, according to the Chinese Ministry of Commerce, an increase of 41 percent during the same period in 2018. The contracts They are mainly for the construction and equipment of large Chinese companies that use Chinese skilled labor and loans from Chinese banks, although projects often also create jobs for local workers.

The latest contracts include a subway system for Belgrade, Serbia; an elevated railway line in Bogotá, Colombia; and a telecommunications data center near Nairobi, Kenya.

The return of Belt and Road is likely to increase tensions with the United States, which fears that China is building a world block of nations that will mainly buy Chinese products and lean toward China’s authoritarian political model. The initiative appears in many of the disputes between the two countries on national security and technology.

The fever of the new Belt and Road contracts follows a public setback by Chinese officials in 2018 after projects in Malaysia, Sri Lanka, Pakistan and elsewhere were criticized by local and other officials as inflated and costly. China argues that since then, it has perfected practices to cut waste.

“We will continue to follow a high-level, people-centered and sustainable approach to promote high-quality cooperation in the Strip and the Road with partner countries,” said Xi Jinping, China’s leading leader, during a visit to Brazil in November.

Chinese officials have long presented Belt and Road as An opportunity to give emerging markets the same type of world-class infrastructure that has helped make China a world economic power. Under Belt and Road, Chinese state-owned banks generally lend virtually all the money for Chinese companies to carry out a construction project. Borrowing countries must pay the money, often with oil or other natural resources.

Officials in the United States and Western Europe have long criticized Belt and Road as a predator, and in recent years, some officials in developing countries began to agree. In 2018, Sri Lanka gave its main port to China after it was unable to pay the loans, while Malaysia halted its expensive Belt and Road projects.

Chinese leaders began to recognize criticism. Deputy Prime Minister Liu He of China publicly expressed his concerns in early 2018 about strong loans from Chinese banks, not just the Belt and Road Initiative.

In the following months, Chinese financial regulators took drastic measures against domestic and foreign loans. The new Belt and Road contracts collapsed, Chinese data showed. China’s financial regulators He told the country’s banks to analyze twice as many loans to poor countries. The main leaders practically stopped mentioning the program.

But the credit crisis produced a much wider slowdown in the Chinese economy in 2018 than expected. Financial regulators reversed the course. That has produced a resurgence of loans for national infrastructure projects and for Belt and Road projects alike. The contracts began to be signed again in the last weeks of 2018, and the momentum accumulated until last year.

In recent days, two groups representing Western governments, businesses and banks have raised questions about the resurgence of the Belt and Road Initiative.

A report published Thursday morning by the European Chamber of Commerce in China concluded that telecommunications networks and ports built in China are set up in a way that hinders the competition of European shipping companies, software providers and other companies.

A survey conducted by the chamber of its members also found that they had been almost completely excluded from the tender of contracts of the Belt and Road Initiative, which was mainly aimed at Chinese state-owned companies.

“It was quite sobering to see that for companies, it is quite insignificant what we get from this,” said Joerg Wuttke, president of the chamber.

The Institute of International Finance, a research group in Washington backed primarily by large western banks, issued a different warning on Monday as part of a larger report on global debt.

The institute’s report says that many poor countries in the Strip and Road Initiative now face a sharp increase in the debt burden. Many of these countries could barely qualify to borrow money even before taking on the new debt, according to the report.

The institute’s report also said that 85 percent of Belt and Road projects involved high greenhouse gas emissions linked to climate change. These projects have included at least 63 coal power plants.

The new reports come after a warning issued last year by European International Contractors, a commercial group of construction and engineering companies. The commercial group warned that loans for Belt and Road Initiatives tend to have significantly higher interest rates than those of credit institutions such as the World Bank.

The construction industry group, and also the European Chamber, said that the costs of the Belt and Road Initiative projects are often greatly underestimated so that they can meet with Beijing officials. Poor countries then end up paying the cost overruns, they said.

European business groups, which include manufacturers of telecommunications equipment, have recently focused on Belt and Road’s emphasis on telecommunications. Many developing countries now have national telecommunications networks built by two Chinese companies, Huawei and ZTE, which have been large participants in the Belt and Road Initiative. Huawei won a contract last spring to build a large telecommunications data center in Kenya.

The European chamber report said the networks were designed in a way that made it difficult for European companies to sell more hardware or software in these markets. In contrast, European markets for telecommunications equipment are often more open, he argued. Huawei, for example, has tried to provide equipment for Germany and Britain.

Along with telecommunications, the biggest security concern in the West about the Belt and Road Initiative has involved the construction or expansion of large ports in China. These ports now surround the Indian Ocean and extend along the west coast of Africa and to the Mediterranean.

The European Chamber report said that European shipping companies, which have been ranked among the largest in the world since the Middle Ages, are increasingly at a competitive disadvantage. The new ports are designed and managed by Chinese state-owned companies that are under the same Chinese government agency as Chinese shipbuilders and Chinese shipping companies.

China has argued that economic growth has long suffered in many emerging markets due to high transport costs, and that the construction of new ports can reduce these costs.

Lin Qiqing contributed to the Shanghai investigation.

Leave a Reply

Your email address will not be published. Required fields are marked *