China expected to invest US $ 4-8 t on BRI | Sunday Observer

China expected to invest US $ 4-8 t on BRI

China is expanding its presence in the Indian Ocean not only by constructing harbours referred to as the necklace of pearls but also by sending naval assets into the Indian Ocean.

For the first time it has built a naval base in Djibouti, the African horn and is flexing its muscles in the South China Sea.

However, Western and Indian commentators have been sounding the alarm about China’s outreach into the Indian Ocean with its massive investments on the Belt and Road Initiative (BRI). These concerns have been further exacerbated.

Dr. Palitha Kohona, former permanent representative of Sri Lanka to the United Nations who has written extensively and delivered lectures on the subject, spoke to the Observer Business on the BRI and its benefits to Sri Lanka.

The ‘One Belt One Road’ (OBOR) or known today as the ‘Belt and Road Initiative’ (BRI) launched by the Chinese President Xi Jinping provides Sri Lanka a unique opportunity to expedite economic growth bring prosperity to the country.

The enormous benefits the initiative offers to participant nations including Sri Lanka, will help restore the prime days of the ancient Silk Route for Sri Lanka.

The China’s BRI investment ambitions focused primarily on cooperation, infrastructure and connectivity enhancement are being compared with the post World War US Marshall Plan.

However, the funds available under the BRI make the Marshall Plan pale in to insignificance. The Marshall Plan designed to assist selected Western European economies recover from the World War devastation offered over US$ 140 billion at the value of the dollar in 2017. However, the BRI expects to make available a stunning US$ 4-8 trillion.

While the Marshall Plan achieved much, the BRI funds can be expected to realise substantially much more by creating a vast region of shared prosperity, the beneficiaries being a large number of developing countries.

The Chinese Yuan has been recognised as reserve currency by the IMF and China appears to be increasingly moving towards international payments in Yuan. The Yuan joins the US dollar, the Euro and the Yen and the British Pound in the IMF’s special drawing rights (SDR) basket which determines currencies that countries can receive as part of IMF loans.

Despite the muttered reservations and orchestrated criticism, already countries of the region especially in Africa are reaping the benefits of the Chinese investments in the region. Economists agree that the recent rapid upward movement of the economies in the African continent has been due to the major Chinese investments.

China’s infrastructure investment by 2014 had risen by over 20-fold to $ 220 billion in Africa according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies in Washington. It is likely that this trend will accelerate as China learns from experience, irons out irritations and respond more to the aspirations of the people in the region.

Since 2000, Ethiopia has been the second largest beneficiary of Chinese loans to Africa with financing for dams, rails and manufacturing plants worth over $ 12.3 billion more than twice the amount loaned to oil-rich Sudan and Mineral rich Congo.

Australia received AUD 15.4 billion in Chinese investments comprising 103 deals. Australia is the second largest recipient of Chinese investments after US and investors have grabbed hotel assets, agri business, real estate, healthcare and infrastructure.

The major share of Chinese investments has gone to Europe and the US. In Europe iconic facilities such as the Toulouse airport where airbus is assembled and the Pirraes habour are now owned by Chinese companies. China’s trains now ply to European capital including London on overland route and link up with Teheran. Natural gas from Central Asia now flows along four pipelines to China.

Pakistan, known as an all weather friend by President Xi Jinping has been pledged US$ 62 billion in investments for infrastructure development. The China-Pakistan Economic Corridor is the flagship project under the BRI.

However, the expansion of China’s economic reach has caused more than a few nervous twitches in certain international circles especially among powers which had been used to dominate the world stage. Sri Lanka needs to be fully conscious of this fact.

Therefore, it is vital to create a well informed and highly professional approach to engage with nervous neighbours and distant suitors with the national interest foremost. Those who represent the country must have national interest ingrained in them.

While normal interstate relations will occupy our time we must allocate resources to highlight what Sri Lanka has to offer as an investment destination, encourage investors to think positively of the country when making investment decisions, create a better understanding of the country’s investment climate and trading opportunities, its natural and human potential and foster closer ties between business communities and its counterparts overseas.

The BRI, an initiative launched in 2013 by the Chinese President is a development strategy that focuses on connectivity and cooperation between Eurasian countries, primarily the people’s republic of China, the land based Silk Road economic belt and the ocean-going maritime Silk Road.

The Initial focus has been infrastructure investment, education, construction materials, railway and highway, automobile, real estate, power grid and iron and steel. Already some estimates list the BRI as one of the largest infrastructure investment projects in history covering over 68 countries, including 65 percent of the world’s population and 40 percent of the global GDP as of 2017.