Japan Institute for National Fundamentals

Speaking out

Hiroshi Yuasa

【#497】Stymied Chinese Empire Projects

Hiroshi Yuasa / 2018.02.22 (Thu)

February 19, 2018

     The Chinese Xi Jinping regime’s Belt and Road Initiative (BRI), a modern silk-road economic zone scheme, has been stymied in Southeast and Southwest Asia. This is because the BRI, though emphasized by China as designed for mutual benefits, is suspected as representing predatory economics.
     The BRI calls for creating one belt as an onshore silk road and one road as a maritime silk road and combining them into a large economic bloc as dreamed by China seeking to become a superpower to outdo the United States. As European imperialists deployed gunboat diplomacy towards the East using poisonous opium, China is expanding infrastructure investment and products export towards the West. Instead of opium used in the 19th century, China now uses 21st century poison of massive debt.

A string of construction setbacks
     Even China’s quasi ally Pakistan has recently rejected $14 billion in financial aid from China for the construction of a dam for hydropower generation in the upper Indus. The aid was conditioned on the transfer to China of the ownership and management right after its completion, indicating a virtual takeover. Similarly in Nepal, a $2.5 billion hydropower plant construction project has been put off.
     In Myanmar, a $3.5 billion dam and hydropower plant construction project launched with Chinese aid has been suspended due to opposition from local residents. A Bangladesh port development project has been stalled as an Indonesian high-speed railway project has. In many of these cases, confiscation proposed in return for debt forgiveness might have ignited anti-China nationalism.
     Developing countries attracted by the BRI have grown vigilant about China since the Sri Lankan government ceded control of the strategic port of Hambantota to China at the end of last year. China had concluded a contract to lease the port for 99 years for $1.12 billion in a deal similar to an erstwhile 99-year lease of Hong Kong’s New Territories to the British Empire.
     China provides loans for infrastructure construction carrying high interests of up to 6.3% and confiscates strategic properties like ports on borrower countries’ failure to repay debt. These deals put under the cover of the BRI seemingly indicate coexistence and co-prosperity. In fact, however, China aims to take over mortgages for loans.

China approaching Europe and Africa as well
     China is expanding into the Mediterranean in addition to the Indo-Pacific. In a bid to escape from a debt crisis, Greece privatized Piraeus Port and sold most of it to a Chinese state-run company. China intends to control the strategic port for extending the BRI into Europe. In Africa’s Djibouti where the U.S. military and the Japan Self-Defense Forces hold bases, China built its first overseas base after lending billions of dollars. Djibouti plagued with a debt crisis had no choice but to lease the base site to China for $20 million a year.
     The BRI was put into President Xi’s address to last autumn’s Chinese Communist Party Congress and cannot be allowed to fail. China’s recent approach to Japan seeks to draw Japan into the BRI and take advantage of Japan’s credibility. As the U.S. Trump administration’s National Defense Strategy has criticized such Chinese model as predatory economics, Western countries have begun to notice the BRI as representing such economics.

Hiroshi Yuasa is a Planning Committee Member at the Japan Institute for National Fundamentals.