Doubts about the effectiveness of China’s Belt and Road Initiative (BRI) have been expressed in various quarters for some time now. The concerns stem from a struggling Chinese economy, increased loan defaults, and the withdrawal of member nations like Italy and the Philippines, signaling potential challenges for China’s global initiative. Despite these issues, Walter C Ladwig III, a Senior Lecturer in International Relations at King’s College, remains optimistic. At the Indo-Pacific Regional Dialogue in New Delhi recently, Ladwig delivered a talk titled “The Diminishing Effectiveness of the BRI?” where he argued that China is taking corrective measures to safeguard its ambitious project. However, he observed that the Chinese government will not keep pouring funds into black holes like it did in the first decade.
According to Ladwig, China has acknowledged and learned from the mistakes of the initiative’s initial decade. He emphasised that steps are being taken to protect the BRI, which is President Xi Jinping’s signature policy initiative. Ladwig cautioned against prematurely assuming the decline of the BRI, stating, “So, I think it is a big mistake to pat ourselves on the back and think the BRI is going away.”
China has realised that its domestic development banks lack effective risk management and project analysis tools. As a result, the Chinese government is now turning to Western commercial banks for assistance. A key lesson China has absorbed, involves collaborating with Western banks instead of relying solely on its development banks. Ladwig highlighted the necessary risk management and analysis tools aspects. Consequently, China is now engaging with Western institutions such as BNP Paribas and Standard Chartered, and the European Bank for Reconstruction and Development are partnering with the BRI project. These strategic shifts aim to prevent the excessive financial commitments seen in the initiative’s initial phase.
Ladwig argued that the absence of a credible alternative to the BRI is due to China’s unmatched efficiency and project delivery capabilities. He asserted, “China delivers better and faster than the G7, better than the multinational development banks. So, you need to pair transparency with delivery to beat the Chinese.”
Addressing concerns about corruption, Ladwig contended that some leaders in developing countries know the risks of dealing with China. However, he pointed out that the lack of viable alternatives from the G7, World Bank, and IMF leaves these countries with limited options, prompting the need to explore alternatives.
Regarding the influence of pro-China leaders on BRI loans and projects, Ladwig acknowledged that China strategically benefits from its initiative. He noted that China tends to invest more in countries that align with a pro-China stance, using the BRI as a tool to reward or punish governments based on their alignment with China’s interests. Ladwig emphasised the significance of political changes, citing instances where elections in countries like Argentina influenced the unlocking or restriction of infrastructure funds based on the candidates’ alignment with China.
Team BharatShakti
(Note: Click the following web link to watch the full interview “China’s BRI 2.0: What’s New?’ https://www.youtube.com/watch?v=2W7OZTmotwI)
