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Event Report

NIICE NEPAL organized a webinar on the Belt and Road Initiative post COVID19 dated 8 Sept 2020 where Professor Maria Adele Carrai spoke about the status of China’s Belt and Road Initiative following the COVID-19 pandemic. She discussed the BRI project, an ambitious plan to establish two new trade routes linking China with the rest of the world, unveiled in 2013. The talk primarily focuses on the BRI’s projects (such as Digital Silk Road and Health Silk Road), their state during the pandemic, and their difficulties. The professor also draws attention to the BRI-related tensions between the US, EU, and China.

The Pre-Pandemic State of the Belt and Road Initiative

The Belt and Road Initiative is an effort to promote connectivity on a global and regional scale through international cooperation. It was introduced in 2013 by Xi Jinping, is global in scope, and supports China’s foreign policy. Its main goal is to improve connectivity between China and other nations by providing infrastructure and other services related to connectivity. It focuses on five significant aspects: 1. investments; 2. coordination of policies 3. Unrestricted trade; 4. Financial integration; and 5. Individual bonds.

China is becoming more visible on the global stage thanks to this initiative. Numerous projects have been carried out as part of this initiative. According to the data, the volume of goods and trade between China and the countries in the region under the Belt and Road Initiative surpassed 6 billion USD between 2013 and 2018. China has signed numerous agreements over the last six years, including 173 agreements for cooperation with 125 nations, including developing and developed nations and international organizations. It is intriguing how strongly China is promoting a partnership-based approach to policy. It does not establish an alliance and is not a legal document. Two-thirds of Chinese BRI projects are energy-related.

The US, the EU, and many African countries criticize the BRI initiative because they see it as a threat to the global system of rules-based governance. The liberal order is thought to be in danger. The COVID pandemic, which claimed many lives, affected world economies. 2020's predicted global economic contraction of 3% will be greater than the 2009 global financial crisis.

BRI and the pandemic

Every country’s travel restriction for people and goods and the collapse of economies impact supply chain management. The pandemic had a significant impact on 20% of the projects. Due to the lockdown and increased impact of the pandemic, the value of new construction contracts signed in BRI countries decreased in the first half of 2020, compared to a 33 percent increase last year.

According to reports, the crisis has already caused delays in or suspension of the Sihanoukville special economic zone (Cambodia) and the China-Pakistan economic corridor projects, as well as the building of the Colombo port in Sri Lanka, the Jakarta-Bandung high-speed railway in Indonesia, and other infrastructure projects. China's foreign minister, Wang YI, declared that 200 new international cooperation agreements for the Belt and Road had been signed with nations during the pandemic. Investments in the BRI project has declined since 2016 when China’s economy was at its strongest.

Despite a decline in global trade that coincided with the global economy, trade between China and the BRI nations held up quite well. The pandemic caused an explosion in e-commerce, which countries with better digital infrastructure were able to manage. Several cable networks, including 5G, a data research center, a project to build smart cities, and significant e-commerce and mobile payment agreements make up the Chinese digital Silk Road.

The idea of the digital Silk Road is consistent with the Made in China 2025 industrial strategy, which aims to make China the next cyber superpower. Beijing has given a Chinese tech giant a fantastic line of low-cost credit and police support as it expands internationally. On the one hand, the digital Silk Road helps countries without developed digital infrastructure and has given and will continue to give more countries access to the internet. On the other hand, there are concerns in the liberal world that this will bolster China's surveillance apparatus, that China will grow to be a cyber-power, and that China will challenge the dominance of the US and EU.

The Silk Road and the Pandemic

It is believed that the development of 5G will be essential for economic recovery. Resistance to the virtual Silk Road is fierce. The Health Silk Road was first launched in 2017 when an MOU was signed with the WHO committing to constructing an HSR to improve public health in BRI countries. HSR is an extension of mask diplomacy, providing medical assistance to BRI countries participating via donations, consultations, and commercial exports. China uses this as a soft power and is interested in developing the BRI's infrastructure while expanding its soft power.

Challenges to China’s BRI

There have been discussions around the initiative of China to finance this infrastructure project and provide loans that need to be returned. These economies find themselves in distress, having to pay back the loans. However, studies have shown no evidence of Chinese intent to put these countries in such a situation. This dispels the myth that African nations owe money to the Chinese government. Instead, they owe money to private Chinese companies. Because the pandemic has seriously harmed their economies, low-income countries have written to China pleading for help. Following discussions with politicians, China has concurred. The competition between us and China has escalated from producing cheap toys and t-shirts to other economic sectors and protecting its assets.

Conclusions

The pandemic has exacerbated many trends similar to the decline in investment, which peaked in 2016 and had a downward trend prior to the trend. China needs to be aware of the forces that affect its investment. An increase in the tension between the liberal world and China and the EU is becoming much more concerning. The Belt and Road initiative is well-known and houses numerous projects. Furthermore, she does not appear to be struggling. However, we can observe deliberate Chinese spending because their investments depend on the nation's capacity for repayment and subsequent financial gain.

Prepared by Khyati Anand, Intern at NIICE, Nepal