Manoj Adhikari
The Belt and Road Initiative is a
global development strategy adopted by the Chinese government in 2013 involving
infrastructure development and investment in nearly 70 countries and
international organizations in Asia, Europe, and Africa.
There is a big question whether
this ambitious Belt and Road project of China is going to end because of the
Covid-19 pandemic. Covid-19 pandemic is not only a health crisis but also the
global economic crisis. There is a question of whether the different ports
& railways being built by China on the various region under the BRI Project
will be failed or not. A devastating global economic collapse after Covid-19
lead to social and political turmoil in the number of countries. Within a very
short period of outbreak, Covid-19 which started from China now captured the
whole world and the main reason behind it is connectivity between the
countries. Interestingly, the pandemic has exposed the risks and weaknesses of
global interconnectedness, which will affect China’s BRI. One thing is sure
that global connectivity is going to be curtailed because of this crisis. Most
of the countries are internally and internationally locked down. People are
even not allowed to step out of their house. In this type of situation, the BRI
project is sure to face a big question regarding its necessity.
It seems that there will be a
funding shortfall for the BRI Project. So far BRI has been primarily powered by
China, whose growth rates were decreasing even before the outbreak. China’s
growth hit a near 30 year low of 6.1% in 2019
According to Cheng, (2020), roughly 5 million people in
China lost their jobs in the first 2 months of 2020. Last February, China’s
official urban unemployment jumped to an unprecedented 6.2 percent. It is
forecasted that unemployment may go up to 9 million by the end of 2020. China
will surely ramp up its spending to revive the economy and it could cut growth
target which was set by the Chinese government in the year 2010 to double its
GDP in 2020.
It will be hard for the Chinese
government to convince their people & enterprises to invest in BRI. So, not
only may BRI be short of cash, but it will be also hard to sell at home.
Covid-19 hit Chinese companies executing BRI contracts can rely on support from
the China Development Bank (CDB) in the form of low-cost financing. Yet,
Chinese policy banks will be increasingly picky and inclined to stay away from
new projects that may turn out to be loss-makers. No matter what, the Chinese
government cannot support all the companies from being bankrupt.
Once the report was published
which outlined the Xi Jinping’s world view and categorized the 10 priorities of
his government. In his priorities list, there are two components of Belt and
Road namely (a) Terrestrial Silk Road Economic Belt & (b) Maritime Silk
road which falls on numbers eight & nine, respectively. Terrestrial Silk
Road Economic Belt is a BRI project on Land. Whereas, Maritime Silk Road is the
BRI project on Seas. It can be concluded that there are other matters in the
priorities list to which the Chinese government give more weight than the BRI
Project. Under extreme circumstances, Beijing will not consider BRI as
important.
On the other hand, all the
economies along BRI routes are affected. Pakistan, the host to the biggest BRI
megaproject (China Pakistan Economic Corridor) in the world, is poised to
sustain an $ 8.2 billion loss
Despite such harsh situation Belt
and Road Initiative Project has not come to an end yet. China till now has
invested roughly $ 545 billion in BRI, according to the world bank. The
initiative’s fuzzy content is being further enriched with the “Health Silk
Road” add-on narrative and “Mask Diplomacy” in a major soft-power push. The
connection China has made under BRI is now being used to sell medical
equipment. Under its mask diplomacy, China sends doctors and masks overseas as
domestic coronavirus infections drop.
In Short Term BRI is sure to face
the trouble. The outbreak has brought Chinese labor supplies and equipment
imports along the BRI route down to a trickle. In particular, the summer of
2020 may be a period of hibernation for many BRI Projects. But in Long Term a
Changed BRI will emerge. The BRI is bound to change and strategies will be
changed. China never gives an exact and clear definition of the BRI project.
The main aim of China behind the project is still not clearly stated by the
country. This is one of the reasons why the BRI has become controversial and
has caused a backlash in major countries. There is a chance that China may
define BRI more properly. Seven years after this ambitious initiative was
announced it remains a blurred vision in need of a comprehensive conceptual
framework, international standards, and a coherent implementation strategy.
Now there is a chance that China
may shift away from Roads and Bridges under BRI. Out of $545 billion invested
in BRI about two-thirds of the spending on BRI Projects has gone into the
energy sector and transport. However, due to this pandemic developing countries
will be terribly cash strapped. There is a high chance that they may shift away
from road, bridges and coal-fired power plants funded through Chinese Loans.
Now China may choose the new BRI Projects more strategically. New BRI projects
will likely be focused on more sophisticated forms of connectivity, such as 5G
networks or, in the wake of the pandemic, disaster management, public
health-related high-tech, and even remote surgery. China will surely use the
BRI for the projection of its soft power, an increasingly important battlefield
in international relations.
Surely, China will change its strategy of BRI, but it remains to seem will the post Covid-19 world will accept the new BRI. The world has become aware of the risks of overwhelming reliance on China.
Author is chartered accountant by profession.
