The famous Silk Roads were launched by Xi Jinping at the start of his first term as head of the Chinese Communist Party. It was then a major axis of its foreign and trade policy. As he prepares to begin a third term, where is this alternative to American globalization, initiated by China?
In the official discourse of Chinese leaders, references to this massive weapon of economic diplomacy are becoming increasingly rare. However, the projects are very real with some 150 countries involved. About 3.500 billion dollars have been injected since 2017, i.e. three times the amount of the American giga-plan for infrastructure, proposed by Joe Biden. Given the scale of the network, it is hard to see Beijing suddenly withdrawing. China today needs a return on investment, and first hears that it be reimbursed for the money lent. But times have changed, and the promise of a win-win partnership has withered with the rise of new economic risks and harsh criticism from the countries concerned.
Beneficiary countries are on the verge of bankruptcy
It is in Sri Lanka that the default is the most dramatic. The population, deprived of everything, rebelled against power. Pakistan also has precarious finances, weighed down among other things by the debt linked to the Silk Roads. Many other countries are still weakened because of the pharaonic projects initiated by Beijing. A quarter of the States concerned by this gigantic project are in a situation of financial stress. Initially, by playing the role of creditor of the emerging planet, China found a heaven-sent outlet to convert its trade surplus with the United States and thus limit the rise of the yuan. But the eruption of the Covid and the economic difficulties that accompany it have put a brake on projects. Reimbursement difficulties are increasing, causing a major problem for indebted countries, but also for China, which is trying to recover its stake. Second recurring criticism: these infrastructures, supposed to accelerate development, do not always keep their promises. Sometimes the work is not completed. This is the case of the railway line to link Mombassa in Kenya to Uganda, Beijing refusing to finance the last section of 300 kilometers. In addition, this new mode of transport is prohibitively expensive, therefore neglected for the freight of goods. Sometimes, these infrastructures do not correspond to any real need or have failed to create this need. This is the case of the international airport built in Sri Lanka or the port of Hambantota, which cargo ships ignore. Reimbursing loans for works that do not bring in anything represents an unbearable burden, pushing many countries to renegotiate or denounce the agreements concluded. We have seen it in Indonesia, Malaysia, Nepal, or even Bangladesh.
Do these disappointments call into question the sustainability of the Routes Silk ?
Xi Jinping has woven his web for internal economic reasons. Its objective was to facilitate trade, by finding new outlets, and by opening up the eastern provinces. In this regard, the future seems very uncertain. World trade is slowing down and regionalizing. China is also seeking to respond as a priority to its domestic demand and above all, it is today facing a severe slowdown in growth, because of the zero Covid policy, and the war led by Russia in Ukraine. . What partially call into question this “silky” canvas. This project also has a strategic purpose, even more important for Beijing. It is an alternative route to the China Sea for exporting. And this objective remains an absolute priority at a time when the relationship with Taiwan is becoming dangerously strained. The Silk Roads therefore still have a bright future, even if it means being partly reformatted.
Jules Gabas With Agency / ECO Inspirations