China’s Belt and Road Initiative Leads to Debt and Corruption: Experts

Sri Lankan road construction workers construction labourers works along a road in Colombo on August 5, 2018. - Sri Lanka's central bank on August 3 announced it had secured a $1 billion Chinese loan as the island, a key link in Beijing's ambitious Belt and Road initiative, develops closer relations with Asia's largest economy. Lakruwan Wanniarachchi/AFP via Getty Images

China pledged an eight-point infrastructure scheme as part of its next five-year Belt and Road Initiative (BRI) goal in a recent international forum in Beijing.

In the third BRI forum opening address on Oct. 18, Chinese leader Xi Jinping promised a $47.8 billion financing pledge from Chinese development banks, “small yet smart” projects that entail 100 joint laboratories, and 100,000 training opportunities for partner countries by 2030.

Without specifically naming the United States, Mr. Xi said China “opposed geopolitical rivalry, bloc politics, unilateral sanctions, economic coercion and decoupling, and supply chain disruption” in his address.

Experts suspect BRI is unraveling, considering the country’s falling domestic economy and the series of Chinese real estate defaults, as up to 40 percent of bank loans in China are associated with real estate.

Yet, Mr. Xi’s continuing grandiose promises of lavish spending send a worrisome signal to the Chinese people, experts warn.

A Decade of Debt Trap

This year marks the 10th anniversary of BRI since it was launched in 2013, with a claim to improve connectivity and cooperation on a transcontinental scale.

After a decade of international cooperation, the BRI has faced significant controversy, primarily related to Beijing’s engagement in exporting corruption, debt-trap diplomacy, and exploitation of labor.

Cheng Chin-mo, chair of the Global Politics & Economics Department at Tamkang University of Taiwan, commented that the BRI summit is more of an image and propaganda for domestic audiences, as many BRI projects have ended without completion and resulted in heavy debts for the recipient countries. “For many developing nations, the BRI has become nothing short of a nightmare,” said Mr. Cheng.

He took the crashed cabinet of former Prime Minister Najib Razak of Malaysia as an example. In May 2018, Mr. Najib was ousted from office, and he was accused of a multi-billion-dollar graft scandal linked to the country’s development fund known as 1MDB (1Malaysia Development Berhad). It was believed that China exploited the corrupt Malaysian regime to advance its BRI.

Previously, the Wall Street Journal exposed evidence such as minutes from a series of meetings at which Malaysian officials suggested to their Chinese counterparts that China finance infrastructure projects in Malaysia at inflated costs. It implied that the extra cash could be used to settle 1MDB’s debts.

Exporting Corruption

Mr. Cheng said that BRI has served Chinese corrupt officials as a money laundering mechanism to channel their corrupt monies abroad.

In Xi’s address, China will work with its BRI partner countries to strengthen the building of multilateral cooperation platforms covering multiple fields such as energy, taxation, finance, green development, disaster reduction, think tanks, media, culture, and anti-corruption.

Feng Chongyi, associate professor in China Studies at the University of Technology Sydney, pointed out that when it comes to the Chinese Communist Party (CCP), the claim must be interpreted in reverse. That is, when it speaks of anti-corruption training, it is really about “spreading corruption,” said Mr. Feng.

He believed the decade of BRI has directly resulted in the sagging economy and debt crisis in China. “Those state-owned and central enterprises engaged in the BRI projects have to bribe local officials, and these projects are conducted through corrupt practices. The cost of each project is inflated to benefit the corrupt officials,” he said.

Corruption is a rampant issue in many African nations, where numerous unfinished projects associated with BRI have been reported.

Shipping containers sit beside railway lines running into Mombasa port in Mombasa, Kenya, on Sept. 1, 2018.  Luis Tato/Bloomberg via Getty Images

In Kenya, for instance, a Chinese-built line from the coast all the way to Uganda in 2017 ended abruptly in a remote village, about 120 km (75 miles) west of the Kenyan capital of Nairobi after Beijing pulled out.

China is Kenya’s biggest external creditor, with about 22 percent of the country’s external debt as of December 2018, according to Kenyan National Treasury data, reported the Taipei Times.

Pillar of Support for Terrorists

Su Tzu-yun, director of the Institute for National Defense Security in Taiwan, told the Chinese language of The Epoch Times that the BRI, while presenting an economic facade, actually harbors underlying geopolitical strategies that have been realized by the West.

Many EU countries showed passive resistance after being deceived by China’s BRI for more than a decade, and Hungary is the only European country that attended the forum. “BRI has evolved into a ‘debt road,’ along with the economic struggle China’s faced with itself. This initiative is clearly and quickly hitting a dead end,” said Mr. Su.

On Oct. 17, Mr. Xi met leaders from Indonesia, Serbia, Chile, Kazakhstan, Hungary, Papua New Guinea, Ethiopia, and more. The focal point among the various dignitaries was Russian President Vladimir Putin.

Mr. Cheng said the irony in the fact that one of the attendees was a senior official from the Taliban.

The Taliban’s acting commerce minister Haji Nooruddin Azizi arrived in Beijing for the BRI Forum, according to a Reuters report.

Earlier in September, the CCP’s Hangzhou Asian Games welcomed Bashar al-Assad, Syria’s dictator who forcibly disappeared tens of thousands of Syrians and put the entire country into a state of humanitarian crisis.

The CCP arranged special planes to escort Mr. al-Assad in and out of Beijing. “It is really embarrasing that CCP has turned China a supporter of terrorists,” said Mr. Cheng.

Haizhong Ning and Luo Ya contributed to this report.