Real Development or Debt Trap? - Understanding China’s Belt and Road Initiative
Author: Jerry Ji
Editors: Ava Holtzman, Joshua Blaustein
On the second leg of a tour of Africa aimed at promoting American regional investment, U.S. Treasury Secretary Janet Yellen emphasized the importance of addressing Zambia’s heavy debt burden with China. Zambia became Africa’s first pandemic-era sovereign nation to default when it failed to make a $42.5 million bond payment in November 2020. Negotiations over how to deal with the debt load have been ongoing.
Zambia, a country dominated by Chinese financing, is an example of Beijing’s influence and increasing competition with the United States in the region. As China continues to rise, so does its appetite for overseas markets and influences. The complexity of this strategy is deepened by the ever-changing challenges of foreign policy implementation and heated geopolitical environments—namely with the Belt and Road initiative (BRI). The BRI is China’s strategic initiative to develop infrastructure and greater connectivity with the global South by both land and sea—known as The Silk Road Economic Belt and the 21st Century Maritime Silk Road. Officially announced in 2013—soon after Xi Jinping’s ascension to General Secretary, the BRI can be understood as a crown jewel of Chinese grand strategy.
Economically, the BRI is designed to increase economic integration across regions and continents, and advantage Chinese State-owned enterprises (SOEs). Based on its current rate of development, the BRI’s size and scope give it the potential to increase global gross domestic product by as much as $7.1 trillion by 2040, reach over 70 states, and reduce global trade costs by 2.2 percent. Geopolitically, the BRI is designed to stabilize China’s frontier regions and strengthen its diplomatic influence in Eurasia, the Middle East, Africa, Eastern Europe, and Latin America. The BRI strives to promote regional economic growth in regions that may threaten Chinese security, allowing Beijing to reduce its reliance on the Malacca Strait. This initiative is bolstered by the development of more land-based energy pipelines, and providing countries with essential infrastructure projects and integrating developing states’ economies and policies with China. These pipelines are an important aspect of the BRI’s design to secure energy resources. The BRI has led to the signing of energy-related agreements between Chinese and the Gulf states. For example, in 2014 and while visiting China, the Emir of Qatar signed a strategic partnership with China—including a focus on energy production. The warming of Sino-Middle East relations has opened the door for Chinese companies to play a crucial role in energy development and distribution. In March 2017, for example, the China National Offshore Oil Corporation (CNOOC) signed a one-year contract with Aramco that would supply crude oil for the Huizhou refining projects. Chinese companies have also been involved in multiple construction projects, including the Duqm Port and in railway construction. These investments serve as a critical foundation for the Chinese Communist Party’s strategic calculation to develop more effective routes for China’s trade and energy security.
Conversely, the BRI has also to some degree spiked local sentiments in countries along its route. Zambia is not the only African country bearing an alarming amount of debt from Chinese businesses. The debt burden, and the inability of local governments to meet the interest payment give way to the rise of local nationalism and ethno-violences against Chinese workers; similarly, the BRI has raised public concerns about China’s so called conspiracy to gain political and economic leverage on the local level by controlling critical infrastructure systems underlying the government and national enterprises. These implications of BRI should bear more, if not enough, attention from the West.
