The Belt and Road Initiative (BRI), a global development strategy adopted by the Chinese government reflects China’s approach to development financing, which allows developing nations to develop faster compared to the western model.
Commenting on the BRI projects and allegations of lack of standards in development financing by China, Director of Institute of International Affairs and Director of Centre for European Studies at Renmin University of China, Prof. Wang Yiwei said, “Development first and then the developing nations can set rules gradually. The BRI will reduce shipping times for BRI and non BRI economies.”
He was speaking at a seminar on the theme, ‘Belt and Road Initiative, Challenges and Way forward,’ organised by the Ceylon Chamber of Commerce and the Pathfinder Foundation in Colombo last week.
Prof. Wang said that the largest estimated gains are for the trade routes connecting East and South Asia along the corridors that are part of the BRI. Shipping times among countries in the China-Central Asia-West Asia economic corridor will also decline by 12 percent due to improved transport.
Chinese investments in BRI countries will reach up to $ 500 billion and Chinese outbound tourists are expected to reach 700 million in the coming five years.
China has invested over $ 70 billion in countries and regions involved in the BRI since its launch in 2013, with commodity trade exceeding $ 5 trillion.
“China has set up 75 overseas economic and trade cooperation zones with an investment of over $ 27 billion and created jobs for over 200,000 local people,” he said
“It features the 21st century version of cinematography and also it links projects into lines, and lines will grow into belts, zones and economies of prosperity. A good road can begin good things,” the professor said. BRI is a transportation network in the Eurasian area and beyond. The digital Silk Road has been initiated to help partner countries to bridge the digital gap and inject new impetus into the digital transformation of countries along the route.
China’s Silk Road fund inked 19 projects with a committed investment of $7 billion.
The BRI program initiated by the Chinese Government aims to connect Asia with Africa and Europe through land and maritime networks along six corridors to improve regional integration, increase trade and stimulate economic growth. The program was launched in 2013 involving infrastructure development and investments in 152 countries and international organisations in Asia, Europe, Africa, the Middle East, and America.
According to a survey conducted by CCC among the local business community, 28 percent of the participants viewed that facilitation of joint ventures between Chinese and local firms as the top priority of the government for local businesses, to derive benefits from BRI projects.
The majority of Sri Lanka’s private sector wants the government to play a supportive role in facilitating and promoting joint ventures between Chinese and local firms to fully harness the benefits of BRI.
Presenting the findings of the survey, CCC Chief Economist Shiran Fernando said 22 percent of businesses also sought the government’s support to initiate businesses on the reclaimed land of Colombo Port City, a key BRI project in Sri Lanka.
For the BRI projects to succeed, Fernando pointed out that introduction of laws to facilitate joint ventures/PPPs, facilitation of business arbitration, availability of land for investors, higher level of technical skills for service delivery (logistics) and Chinese language skills would be crucial in Sri Lanka.
Although 91 percent of local businesses were aware of the BRI, only 60 percent were aware of how Sri Lanka is linked with the BRI projects and a mere 10 percent viewed that developments with regards to the BRI would impact their businesses. Sri Lanka has three key BRI projects under implementation - Hambantota Port, Hambantota Industrial Zone and Colombo Port City.
Half of the business community were of the view that Colombo Port City would be most beneficial for their businesses, followed by the Hambantota Industrial Zone.
Fernando emphasised that the BRI projects present many opportunities for local firms, including links to value chains via partnership with Chinese firms, transhipment and value addition, potential reduction in logistics and transport costs, enhanced market access and potential to further expand into service industries in areas of logistics-related services, legal services and consultancy.
However, he cited the concerns among local businesses on trade liberalisation and trends of anti-globalisation sentiment as challenges to fully reap the benefits of the BRI.
According to available data, Sri Lanka was the third highest recipient of China’s financial diplomacy between 2000 and 2017, in South and Central Asia. Sri Lanka has received a record US$12.7 billion from China during this period, as concessional and non-concessional loans, through government agencies, policy banks, State-owned commercial banks or investment funds, as well as grants and technical assistance.
Foreign Relations Additional Secretary to President Admiral Jayanath Colombage blamed the mismanagement of borrowed funds by successive governments for Sri Lanka’s current debt problems.