BRI Setbacks

On the surface, the massive Chinese investment project, the Belt and Road Initiative, appears beneficial. Many states in South East and South Asia lack adequate funds to engage in the massive infrastructure development that needs to occur. In fact, the World Bank estimates that $2.5 trillion dollars over the next ten years is necessary for South Asia to develop. Thus, the influx of Chinese money to help develop large, crucial infrastructure projects such as ports, dams, and roads seems beneficial.

However, there has been significant criticism of the Belt and Road Initiative, especially concerning the lack of transparency. The terms of the loans are often not publicized and the loans themselves have often been championed by various political leaders. Somewhat unsurprisingly, there have been numerous reports of widespread bribery and corruption, as Chinese companies have engaged in a wide variety of illegal activities to ensure favorable investment contracts.

Corruption is a widespread problem in the region, with many countries scoring poorly on Transparency International’s Corruption Index. As a result, many foreign lenders and businesses avoid the region, also in part due to poor credit ratings. This results in Chinese construction companies from being usually the sole companies willing to lend to these nations, especially since they are safe in the knowledge that Beijing will intervene politically on their behalf if needed. In addition, the Chinese government encourages these companies to invest in order to exercise political influence on many of these nations, with recent loans to the Philippines and Cambodia helping to persuade these nations to reevaluate their ties to the United States. While the BRI is still going strong, numerous governments have begun to investigate former officials for corruption related to the investment projects, causing significant obstacles to China’s project in the region.

A Wall Street Journal report alleged that Chinese officials inflated the costs of infrastructure projects to allow money to flow to former Malaysian Prime Minister Najib Razak. While both Beijing and Razak have denied the report, instances such as these have been changing the public perception across the region. Prime Minister Mahathir Mohamad defeated Najib Razak in part by making BRI and its lack of transparency a central campaign issue. The recent elections in the Maldives has seen the island return to India’s sphere of influence, and charges of corruption and bribery have been leveled at the ousted president Abdulla Yameen. Both these countries have launched investigations into various BRI infrastructure projects and are assessing their value and the deals made. Even Pakistan, perhaps China’s closest ally on BRI, has expressed interest in reviewing some of the China Pakistan Economic Corridor projects. Perhaps the most infamous instance of the negative possibilities of accepting BRI money was the case of Hamantota Port. Through what critics label as ‘debt-diplomacy’, the Chinese were granted a 99-year-long lease on strategically significant port, just a few hundred miles from the coast of India, a strategic rival in the region.

With billions of dollars already invested, along with significant political capital, President Xi Jinping has a significant stake in BRI’s success. Many experts, including some domestic Chinese scholars, have labeled BRI as China finally asserting itself on the global stage. However, these various examples have caused public perception of the Chinese BRI project to sour. While Chinese money will continue to be hard to turn down, political leaders in the future will perhaps be more wary in accepting large Chinese loans.