China's ambitious dream confronting realty check
China’s prominent political leader of the People’s Republic of Communist China, Xi Jinping, has pronounced to create One Belt One Road (OBOR) in the year 2013. Later in the year 2016, the One Belt One Road project was renamed as Belt and Road initiative as it was misinterpreted. The Belt refers to the Silk Road Economic Belt while the Road refers to the Maritime Silk Road. He raised an initiative of building Silk Road Economic Belt which connects China through Central Asia, West Asia, the Middle East to Europe. He also called in another joint project named as 21st Century Maritime Silk Road which would be connecting the water bodies; The South China Sea, the South Pacific Ocean, and the Indian Ocean.
The prime motive of China’s Belt and Road project is to build the infrastructure and economic connectivity. On the surface, it reveals that China has planned for productively utilize its huge savings in the global market. China is expected to invest up to $1.3 trillion in this project which will link China to Western Europe via both land-based and naval network. The Silk Road Economic Belt would track through Central Asia, Iran, Turkey and Eastern Europe. The Maritime Silk Road would route through South East Asia, South Asia, Africa, and the Mediterranean. Thus, both the roads would terminate in Europe. By creating such a network would provide China’s expansion in overseas labour markets and as well as reduce its cost of the export transaction.
- China has kept an imbalance in its previous record of delivering its projects at home as well as abroad. According to the researchers; Atif Ansar, Alexander Budzier Bent Flyvbjerg, and Daniel Lunn of Oxford University have surveyed the data of various China projects, wherein they found that most of them were overrun by expenditure, unethically managed as well as there were fewer returns for the investors.
- Most of the China’s Overseas Projects ventures the geopolitical value, rather its economic importance. China’s railway project in Laos and its infrastructure in power plants in Botswana were delivered incompetently. According to the study, the developing countries like Pakistan, Nigeria, Brazil should not be certain of the use of the strategy of huge funds being invested by China in its global infrastructural investments.
- Kenya’s railway project which connects Mombasa to Nairobi is one of the biggest infrastructure investment since its independence 1963. Exim Bank of China has invested around 90% of the money and the rest 10% has been added by Kenya government. The Economist Intelligence Unit research reveals that the amount funded for the Standard Gauge Railway cost $5.6million per km, which is believed to be three times the International Standard and four times the Original Estimate. China doesn’t always provide the best value to its associating countries.
- OBOR (One Belt One Road) would require excessive funding in construction, infrastructure, telecommunication, energy widening from China via Asia to Europe. According to the Fitch ratings, Chinese banks are claimed to be inefficient in allocating resources for the infrastructure at its home. Additionally, Chinese engineering and technology are unfamiliar with fluctuation in market forces subjecting to heavy risks in the execution of the project.
- Previously China had planned for Bangladesh-China-India-Myanmar Economic Corridor but later it was wrapped to form One Belt One Road initiative. Moreover, India has not received any proposal for the Project from China. India is concerned over China’s intention upon geopolitics as it is a matter of dispute creating a route through Kashmir to Pakistan.
- Much of the China’s Overseas Projects are claimed to be partnering countries who are debt-ridden which might risk in their repayment. Owing to China’s own indebtedness, project estimation of $trillion would be a huge risk.
An Upshot of Chinese Overseas Projects in selected countries
China has been lending billions to the Africans since decades. China has lent the African Nations for building bridges, roads, stadiums which in return they are given resources like oil, timber and nickel. African countries provide China with the opportunity for the huge economic boom.
- Kenya’s Railway Project undertaken by China was funded around $5.6 million per kilometre, which was claimed to be three times the International Standard and four times the Original Estimate.
- Ethiopia, one of the poorest country, has availed China’s funds for Addis Ababa-Red sea railway project.
- In Djibouti, China has created a new military base on its western port.
- Sri Lanka owes China more than $8billion as it is the largest lender and trading, partner. China’s “Belt and Road Initiative” has sought out to revive its trading and geopolitical relations with Colombo. The Hambantota port is located just approximately 100miles away from Colombo. This port is regarded as the busiest trade courses which connect Europe and Asia.
- In Latin America, Venezuela is indebted with $65 billion to China. Though Venezuela is under a deep recession yet China has been providing loans for their sustenance. Thus, it is a matter of concern whether an economically unstable country like Venezuela could repay its loans to China.