International Trade

China’s Belt and Road Initiative Undermines Partner Countries’ Democratic Governance

While on a state visit to Kazakhstan in 2013, Chinese President Xi Jinping called for the creation of an “economic belt along the Silk Road,” reviving the ancient trade routes that once connected much of the world. Seven years later, the Belt and Road Initiative (BRI) is China’s flagship foreign policy initiative, infusing trillions of dollars for critical infrastructure projects across the Middle East, Africa and Eurasia. Although presented as a multilateral endeavor to strengthen international cooperation, the BRI instead threatens to undermine democratic governance and sovereignty in countries that partner with China.

The BRI is the most conspicuous sign of China’s transformation into a global power, signaling a complete abandonment of the “hide and bide” approach favored by former Chinese President Deng Xiaoping during the 1980s. In his first national address as head of state in 2013, Xi outlined his “China dream,” seeking to rejuvenate the nation and “push forward the great cause of socialism with Chinese characteristics.”

The BRI has expanded rapidly. As of 2019, 80 Chinese state-owned enterprises have launched over 3,100 projects in 123 countries. To date, China has already spent approximately $200 billion  on BRI expansion and is projected to spend $1.2 – $1.3 trillion by 2027.  Through investments in critical infrastructure projects – ports, rail lines, transportation infrastructure, and communication systems – China aims to increase market access for Chinese companies, gain control of strategically significant infrastructure, and increase its overall political influence around the world.

Chinese institutions and state-owned-enterprises (SOEs) have extended onerous loans to fund BRI projects in participating nations rather than development grants. Recipient governments, either through faulty projections or naivety, have accepted untenable and debilitating debt obligations, giving Beijing enormous leverage to force economic and political concessions to strengthen its geostrategic hand.

China’s tactic of “debt trap diplomacy” is already on display across Southeast Asia. In 2017, Sri Lanka’s previous government under Prime Minister Wickremesinghe reluctantly agreed to lease the southern port of Hambantota for 99 years, after failing to fulfill BRI debt payments to Chinese creditors, netting China a commercially and militarily significant port on the doorsteps of India – one of Beijing’s most consequential geopolitical rivals. The new Sri Lankan government has tried unsuccessfully to extricate itself from the obligations imposed by this deal, which was in essence a vanity project of then President Rajapaska.

BRI funding has resulted in Chinese military access to strategically located bases around the world, increasing its ability to project power beyond the Asia-Pacific. In September of 2017, China opened an overseas military base in Djibouti after investing $4 billion in an electric railway there earlier that year. This small nation on the Horn of Africa – also home to a U.S. military base – overlooks the Gulf of Aden and the Bab-el-Mandeb Strait, through which 12% – 20% of all annual global trade flows.

It is difficult for developing nations to reject Chinese investment, even when accompanied by unsustainable debt obligations – and China knows this. According to a 2018 policy paper created by the Center for Global Development, Djibouti, Montenegro, Pakistan and several Central Asian states were at risk of debt distress from BRI commitments. China’s control over their national assets makes it almost impossible for future governments of BRI-participating states to escape Beijing’s political and economic orbit.

The BRI’s geographic scope includes nations already struggling to curtail public sector corruption and to develop resilient democratic institutions. The influx of Chinese patronage exacerbates political tensions and reinforces entrenched autocracies. ALEC model policy to establish a democracy and governance program emphasizes that democracy promotion is a core function of the US government, as evidenced by almost half a century of United States Agency for International Development (USAID) activity. It also references many of the governmental challenges nascent democracies face, including the establishment of rule of law, prioritizing respect for human rights and the holding of free and fair elections.  The model policy supports political processes that advance the development of politically active societies to facilitate more transparent and accountable governance. It also highlights  an independent media as an essential component of a healthy democracy.

Malaysia’s rejection of multiple BRI projects in 2018 under Prime Minister Mahathir Mohamad reflects a growing international apprehension toward Chinese financial cooperation. Under former Prime Minister Najib Razak, Malaysia was slated to participate in numerous BRI projects, including a 430-mile rail link connecting the South China Sea with Malaysian shipping routes. In the buildup toward Malaysia’s 2018 parliamentary elections, multiple international investigations uncovered money laundering and embezzlement between Prime Minister Razak and Chinese officials in association with BRI projects. The public outcry against visible corruption and spiraling debt propelled Prime Minster Mohamad into office and led to Razak’s imprisonment this past July. This ALEC article provides more detail about the 2018 Malaysian election.

So far, the United States and our Western allies have mounted an uncoordinated response to the BRI. The United States has led the charge against China’s growing global influence through Vice President Pence’s announcement of the Indo-Pacific Transparency Initiative in 2018, however, the European Union (EU) has struggled to establish a consistent standard toward BRI investments. Greece, Hungary and Italy have either broken ranks with the EU to sign bilateral memoranda of understanding with China, outlining future involvement, or have already launched BRI projects. Europe’s BRI fecklessness also inhibits condemnation of Beijing’s other abuses. Since 2016, European nations with links to BRI funding have blocked numerous resolutions and statements at the UN Human Rights Council and the Permanent Court of Arbitration, criticizing China’s human rights violations.

Highlighting the predatory nature of Chinese largesse and offering a more transparent, multilateral, and sustainable alternative are sound strategies to counter the BRI. The 2018 BUILD Act, which reorganized America’s Overseas Private Investment Corporation and increased available funds to $60 billion, is a good initial step to enhance America’s ability to provide development assistance around the world. Strategically deployed soft power assets are often more potent and less expensive than military engagement as this ALEC video explains. Optimally, the West should work together to help developing nations create solutions that address underlying shortfalls in public services while avoiding the political and strategic consequences of a China-led global order. Providing viable options to BRI target nations is one of the best ways to protect today’s victims of Chinese-led Communism – see ALEC model policy to establish a day to recognize victims of Communism here.

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