China’s “new Silk Road” turns 10 – the celebratory mood is deceptive

The “New Silk Road” is turning ten years old these days – and China’s state media is celebrating its milestone birthday with exuberant cheers. Beijing’s gigantic infrastructure project has matured into an “international cooperation platform that is open, inclusive and mutually beneficial,” writes the Guangming Daily. “A bright future is expected as the Belt and Road Initiative deepens economic and trade cooperation,” said China Net.

The business portal “Yicai” writes of a “win-win blueprint” for the global trade landscape – and lists the impressive-sounding framework data of the infrastructure project below: Since 2013, China’s government has concluded more than 200 cooperation agreements with 152 countries and 32 international organizations, During this period, the trade volume between China and the regions involved doubled from around one to a good two trillion dollars with annual growth rates of 8.6 percent. Chinese companies invested almost 60 billion dollars along the Silk Road and created a good 420,000 local jobs.

Xi Jinping’s “Project of the Century”

Initially, it was difficult to imagine what dimensions Xi Jinping’s self-proclaimed “project of the century” would one day take on. China’s party leader had not been in office long when he first floated the idea of ​​a global trade, transport and infrastructure network under Chinese leadership during two closely successive state visits to Kazakhstan and Indonesia in 2013. Since then, China has covered the Eurasian-African region and its adjacent waters at a record pace with new transport routes, laid railways, built bridges, tarred highways, built airports and dams, bought into ports and granted development loans on a large scale to connect half the world to the “New Silk Road”. Recently, it was hard to count the number of infrastructure projects that were branded worldwide under the Chinese label “Belt and Road Initiative” (BRI) – which was also due to the fact that in recent years the name has been imposed on pretty much every international development project with Chinese participation.

Much of this was undeniably beneficial to the countries involved. Without Beijing’s loans, many construction projects in the Third and Second Worlds would probably never have gotten off the ground. Financially strapped states were happy about the generous funds from China, which gave them unprecedented opportunities to expand their transport networks – especially since Beijing’s money, unlike Western development aid, was not linked to any demands for democratization or warnings about respecting human rights.

18 EU countries belong to the “New Silk Road” club

Even in Europe, some governments were happy to join in: a total of 18 out of 27 EU countries joined the Belt and Road Club. Some benefited significantly. The Greek port of Piraeus, for example, languished in 93rd place among the world’s container ports before its majority takeover by the Chinese state logistics company Cosco. It entered the top 40 as an outpost of China’s Silk Road.

However, the more Beijing penetrated the world with its mercantile capillary system, the more critically Xi’s declared pet project was viewed in the West. Because it soon became clear that China did not expect a value policy according to Western ideas for its donations, but did expect loyalty in its own sense. In Greece, for example, after Cosco took over the port of Piraeus, the government at the time initially blocked various EU statements critical of China.

The accusation of “debt trap diplomacy” soon began to circulate, with which China was deliberately luring impoverished states into the Belt and Road Initiative in order to be able to take over critical infrastructure as bankruptcy assets in the event of foreseeable payment defaults. This is what happened to the port of Hambantota in Sri Lanka in 2017, and something similar is threatening a motorway route in Montenegro. Although there is little to suggest that China is actually speculating specifically on such borrower bankruptcies, skepticism grew in the West.

There is currently a defensive note in some of the Chinese media’s birthday articles. The party organ “China Daily” writes about “baseless accusations” – and in turn accuses Western politicians of opportunism: “A whole series of opposition parties in countries with BRI participation have used the rhetoric of debt trap diplomacy as a political tool in their election campaigns in order to achieve political goals “To challenge rivals and win votes. But once they took power, they quickly turned to China for loans and investment.”

Putin comes to the anniversary celebration

However, the opposite development is currently making headlines in the West: Italy’s Prime Minister Giorgia Meloni loudly announced her abandonment of Belt and Road membership, which had been initiated under the previous government. The fact that the Silk Road caravan is losing its only G7 member to date has overshadowed the anniversary celebrations in Beijing. In any case, the big Belt and Road Congress will take place there in October largely without Western participation. The star guest, however, has been announced by a man whom Xi Jinping still calls his “good friend”: Russia’s head of state and warlord Vladimir Putin.

Despite all the birthday celebrations, there have been some nuances to be heard recently in China that suggest that the Belt and Road Initiative could be a few sizes smaller in the future. Xu Qinhua, for example, vice-rector of the National Institute for Development and Strategy at Beijing Renmin University, expressed not only a lot of demonstrative confidence but also a few cautious concerns in an interview with the Chinese “21st Century Business Herald”. “The serious and complex internal situation in some countries along the Belt and Road route,” Xu said, “may significantly reduce the cooperation ability and willingness of these countries, thereby hindering the implementation and further development of the Belt and Road construction projects .”

Impending loan defaults

Xu’s comment is likely aimed, among other things, at the fact that the impending loan defaults in some BRI countries are causing increasing headaches for the party leadership. “The Belt and Road is also being increasingly questioned within China,” says Jörg Wuttke, former chairman of the European Chamber of Commerce in China, to the stern. Given the clouded growth prospects and billions in pandemic spending, some Chinese are asking themselves: “Why are we financing the Pakistanis, why Are we throwing so much money into Montenegro?”

Xi himself set a kind of new course for the Silk Road in 2021 when he spoke of “small but fine” projects that should be implemented along the trade routes in the future. Since then, there has been a lot of talk in party announcements about “digital” or “green” Belt and Road development. Instead of the gigantic infrastructure investments of the past, the focus could be on more manageable projects in the future: smaller but more profitable, with less risk of failure and less damage to reputation. The Belt and Road is far from over, but Beijing could tighten its global belt a little in the future.

Western competitor project IMEC

Meanwhile, a competing project is forming in the West just in time for the Belt and Road’s birthday: the so-called “India-Middle East-Europe Corridor” (IMEC) is intended to be a combined land and water trade route from Mumbai via Saudi Arabia and Israel to lead to southern Europe. Its founding was announced at the G20 meeting in New Delhi at the beginning of September by US President Joe Biden, Indian Prime Minister Narendra Modi and EU Commission President Ursula von der Leyen – together with Italy’s Prime Minister Giorgia Meloni, who had recently launched the Belt and Road had promised their country’s exit.

Time will tell whether this new attempt at a Western-led Silk Road alternative will be more successful than its various failed predecessor plans. In China, one detail of the IMEC project in particular was maliciously commented on: the Greek end point of the trade route is in the Athens port of Piraeus – and, see above, the majority of it belongs to the Chinese state shipping company Cosco.