There’s a new highway in Pakistan, new rail terminal in Kazakhstan, sea port in Sri Lanka and a bridge in Laos. What is common between all these is that these are all part of China’s project called the Belt Road Initiative.
The BRI is a $4-8 trillion infrastructure project spreading over 3 continents and almost 60 countries. It is planned to create new routes in and out of China for trade.
Most countries China has invested in have high risk of not being able to pay back but China still continues to give out loan to them. So WHY does China give loan to economically unstable countries?
The answer to this is simple; China wants to become the Economic Superpower of the world beating USA, the current holder of this position and BRI is a perfect plan to make it possible. Most countries are vulnerable to pay back the debts. Take for example Sri Lanka, China gave $1.5 billion to build a deep sea port and Sri Lanka couldn’t pay off so, in return, China took the port on a 99 years lease taking full control of the port. China also has a 40 year lease of strategic port in Pakistan, Chinese naval base in Djibouti and is now going for a similar deal in Myanmar.
Seeing the pattern, why do these countries get into a contract like this? Its because China presents it as a win-win situation for both sides and offer loans without many conditions unlike other countries or financial institutions. Belarus, Hungary, Mongolia, Kenya, Cambodia, Indonesia, Greece, Malaysia, Kyrgyzstan, Poland and many more have all signed a deal with China.
This mostly benefits China in occupying the world a modern day colonization. Like, there is a railroad network connecting China and London, gas pipelines connecting China through Caspian Sea and a speed train network in South East Asia.
China might not be getting back the debts but it sure is achieving some economic goals. Figures show that 7 out of 10 largest contract companies are Chinese. Chinese people are employees as labour force.
China has taken some serious steps and is sure not far away from dominating the world economy.
Udit Adlakha
MBA-FA(2018-20)