Question marks have been raised in recent times over the effectiveness of China’s BRI initiative. Shocked by a faltering economy, rising number of defaults on loans, and recent exits by member nations such as Italy and the Philippines are some of the factors that suggest that China’s global initiative may now be in trouble. But Walter C Ladwig III, Senior Lecturer in International Relations at King’s College, does not believe this to be the case yet. In New Delhi for the Indo-Pacific Regional Dialogue hosted by the Indian Navy and the National Maritime Foundation, where he delivered a talk titled “The Diminishing Effectiveness of the BRI?” Ledwig stated that China had learnt from its mistakes and was taking steps to “insulate its Grand Project.”
“We do see evidence and signs that the mistakes and the errors from the first decade are being studied and learned. Now they (China) are taking steps to insulate this Grand Project. Bear in mind this is Xi Jinping’s Signature policy initiative and he will insulate it going forward. So, I think it is a big mistake to pat ourselves on the back and think the BRI is growing away,” Ladwig said in an interview with StratNews Global.
One of the major learnings that China had put in place was that they were now working with Western rather than Chinese banks to ensure the viability of their BRI projects. “The Chinese have learned not to trust their own development banks which don’t have the proper tools to do the proper risk management or analysis. So now the Chinese are pulling in Western banks such as BNP Paribas and Standard Chartered. In fact, the European Bank for Reconstruction and Development partners with the BRI. So, China isn’t going to pour in money holes like it did in the first decade.”
In his view, the reason no credible alternative for the BRI had emerged is because of China’s unmatched efficiency and delivery when it came to projects. “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.”
“You shouldn’t have this vision that the reason countries are willing to take money from China is because of corruption. In some cases leaders of developing countries are aware of the risks of doing business with the Chinese but what’s the alternative? The G7 isn’t offering them, the World Bank isn’t offering them, IMF isn’t offering them. So, the where are you question needs to be answered.”
On whether pro-China leaders get an advantage in terms of BRI loans and projects, Ladwig pointed that China did use the BRI to benefit itself. “China will double down, and they will invest more in countries that have shifted to more pro-China stance. They are not taking moonshots they are not putting investment into countries that are taking a more pro-American stance. They are not trying to persuade them. So, they are being calculating in that respect.”
“Change in government matters a lot. For instance, in the recent elections in Argentina, there was a China-friendly and a China-unfriendly candidate. If a China-friendly candidate comes to power a lot of infrastructure money gets unlocked quickly to enable a win for him or her. If a China-unfriendly candidate comes to power the scope for loan renegotiation term goes to about zero. So, they use this as a tool to reward or punish governments.”