China is soaking up the benefits of their Belt and Road Initiative (BRI) while other, poor nations are hurting further and our environment is being negatively impacted.
Since its birth in 2013, China’s BRI has embarked on a multi-trillion-dollar infrastructure that would strengthen the connectivity of China globally, but at what cost?
Initially, BRI was developed with the idea of creating a multitude of project investments that would eventually involve over 151 partnering countries creating a global supply chain that would potentially span 60,000 km across sea and land with the potential to generate ~$2.8 trillion dollars in trade. However, in early December 2023, China’s only major Western participant, Italy, expressed its plans to withdraw from the BRI (March 2024) due to unmet promises and initiative frustrations — just five years after joining!
It was also estimated that the developing countries of Asia would require infrastructure investments up to $26 trillion to sustain its growth. And who would provide the financial backing for these mega projects? China of course!
BRI’s incentives and promises would make any neighboring country want to hop on board. The potential to provide economic stability in low-income regions and eventually increase economic wealth through trade sounds fantastic, right? Sure does, the problem is, that >90% of these partner countries are ranked by the World Bank as “low income” or “lower middle income.” This has led to struggles in re-payment of loans that have been provided by China.
China has become a loan shark, causing countries to turn to the International Monetary Fund for financial backing on top of the already existing loans. This has pushed counties such as Zambia so far into debt (~$3 billion) that its government is turning a blind eye by allowing China’s growing influence to take control over the country’s copper mine, broadcaster (ZNBC), natural resources, electric company and its biggest airport. Sri Lanka is a victim of China’s debt trap, where 70% of its Hambantota port was sold to a Chinese company due to incurred losses. Sri Lanka is now so far under water that it could potentially lose its sovereignty.
And what about the environmental impacts? There are major implications on climate change with the potential to increase further if reforms are not put in place. Fossil fuels are currently 80% of China’s energy investments through the BRI, with only 3% going to solar and wind. China’s policies such as oil extraction in the Arctic, coal dumping in developing countries, and excessive cement production have a tremendous impact on the environment and not to mention the devastation this can have on wildlife in those regions!
BRI, the mega infrastructure concept that started as a positive impact on partnering countries, is now looking like a power grab from a country that wants to be known as “The Superpower.” A decade later, the idea that was once portrayed as an economic enhancement to boost lower income economies has now turned into a “Big Bully” situation.
The deals made with China do not come with strings attached, but rather with chains which have empowered China to take over partnering countries’ economic resources and wealth for their own benefits. So what comes next? Well, with no future policies in place, the potential for further environmental damage is inevitable and could have negative impacts for years to come.
We as Connecticut residents cannot be naïve to the fact that the BRI is also having an impact on us and our wallets. The COVID-19 pandemic is a prime example of when two-thirds of BRI projects were hit due to restrictions. Because nations rely so heavily on China’s supply chain, we are now seeing the rise in inflation in an attempt to recover.
Having a negative impact on low-income countries and the environment has shown to outweigh the benefits of the BRI. If integrated policies and the initiative to put forward changes that have an impactful effect on involved countries and the environment were implemented by China, the outcome might be a little greener on the other side.
Sabina Grala MD of Avon and Adam Hudson are students of the MBA program at the University of Rhode Island.