Since 2013, when President Xi Jinping announced his
grandiose vision of a shared future
through better connectivity, the amount of Chinese foreign investment has
been mind-boggling. Various consultants have estimated this to be in the
neighborhood of €250 billion whereas,
according to Bloomberg (see map), more than €300 billion has been invested in
Europe, during the last 10 years.
Particularly in Europe, investments are not limited to
infrastructure but comprise such heterogeneous things as nuclear power stations,
theaters, historic buildings, football teams, restaurants and more. Many, if
not all, of these investments are ‘baptized’ “BRI investments” to the extent
that, for some observers, BRI has become synonymous to “money”.
It is not unreasonable, therefore, that the cash-strapped
countries of the European South have been quite ‘eager’ to engage in a dialogue
with China, starting with Greece and Spain and followed, recently, by
Italy. This development has evoked the
dismay of the European North (Germany in particular[1]),
as well as of a part of the Chinese citizenry, which is questioning the
usefulness of investments in far away places, in the wake of rising
unemployment and the cooling of economic activity at home.[2]
A part of western concerns on BRI investments consists of
what has come to be known as debt-trap diplomacy. The Sri Lankan Port of Hambantota
has often been quoted as a case in point. The practice is not unknown to
certain western ‘financiers’, however, and in short it consists of extending excessive
loans to borrowers, usually under onerous terms, when the lender knows (or
should know) that the debtor will be unable to repay. The alleged aim is to extract
economic or political concessions from the debtor country and/or to eventually swap
debt with equity; i.e., in our case, the lender takes over control of the port.
Some others argue that China might be buttressing repressive regimes,
exploiting developing countries in a neocolonialist manner through high
interest rate loans, and most of all seeking to coerce countries to align with China’s
key strategic and military objectives.
President Xi’s vision, however, is quite the opposite: […]BRI
aims to replace estrangement with exchanges between different civilizations; replace
clashes with mutual learning; and replace a sense of superiority with
coexistence; it aims to boost mutual understanding, mutual respect and mutual
trust among different countries. In this light, the BRI is seen as a path
towards global peace […].[3]
Whether accusations such as the above are true or not, in the case of BRI
investments, remains to be seen. So far, the majority of such concerns and
criticism originate, understandably, from China’s competitors, it is anecdotal, published in dubious outlets, or lacking scientific verification.[4]
For instance, loans to Sri Lanka (Hambantota) were rather
concessionary (2%), while the country’s largest debt is to Japan and not to
China. The case, to my view, was one of wide Sri Lankan public sector
corruption rather than anything else. As regards China herself, in all honesty
she should have known that, with the port of Colombo just around the corner,
the prospective of Hambantota was meager at most.
The case of the Port of Piraeus is not much different
either: At the time of writing, the Greek government rejected a €600 million
port investment plan on grounds of archaeological finds. Also at the time of
writing, a mounting Chinese disillusionment with the port of Piraeus has led
China to start looking at the Italian ports of Trieste and Genoa. Since it was
leased to COSCO, however, the port of Piraeus has become one of the fastest
growing container ports in the world, soaring to the 36th place in global container
traffic rankings, from the 93rd in 2010. The port has only 10 Chinese staff but
employs 1,000 Greeks, and it has created more than 10,000 indirect local
jobs.
One thing is for sure though and this was made crystal clear
by President Xi Jinping at Davos in 2017:
If America decides to retreat from its
global responsibilities, China would gladly pick up the slack.
HE Haralambides
[1]
Interestingly, in this period, Germany has received 10 times as much as all the
others together (with the exception of the United Kingdom).
[2] The
IMF growth forecasts for 2019, for China, are down to 6%.
[3]
Quoted by Yang Jiechi, Member of the Political Bureau of the Central Committee
of the Communist Party of China and Director of the Office of the Central
Commission for Foreign Affairs. China
Daily, 30 March 2019.
[4] To
address this ‘lack of substantiation’, for a number of years now I am trying to
engage Chinese academics and high-level researchers in investigations like:
which ports should be included in the New Silk Road? With which ports should
China partner in Europe and West Africa? How should Chinese industry ‘relocate’
in the wake of a continuously developing New Silk Road? What ship types (and
sizes) should better serve the New Silk Road? Etc. Much of this research has
already been published.
