How Beijing’s belligerence over Taiwan is connected to a Belt and Road Initiative in distress

For years, China focused on economic matters both at home and abroad, with the Belt and Road Initiative exemplifying that approach
But as its economic influence encounters roadblocks, there are signs of a pivot in Chinese diplomacy towards geopolitical wrangling and militarism

Mohamed Zeeshan

Published: 9:15am, 15 Aug, 2022

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In the wake of US House Speaker Nancy Pelosi’s visit to Taiwan, many analysts in Washington are inclined to blame the congresswoman for China’s renewed belligerence. But even before Pelosi’s visit, Beijing was already on a path of militarism and aggression, due to a creeping economic crisis in its foreign policy.

Years ago, when Chinese President Xi Jinping unveiled his flagship Belt and Road Initiative, it seemed like a masterstroke in some ways. China was looking for ways to divert its excess infrastructure capacity and stave off overinvestment.

Meanwhile, many developing countries were envious of its investment-driven growth model. The solution was to use Chinese money, muscle and manpower to build swanky infrastructure overseas.

At first, it was a big hit. People from Tunisia to Tajikistan looked forward to the arrival of posh highways, tall towers and ornate stadiums. But the returns did not quite follow. Many hosts of belt and road projects struggled to emulate the Chinese growth model because, simply put, they were not China: they lacked its bureaucratic capacity, cheap skilled labour, land, water and electricity.

Many belt and road partners were also run by corrupt, authoritarian regimes, which built massive projects more to boost the national ego than the economy. In Sri Lanka, for instance, the recently deposed Rajapaksa clan built a port, airport and conference centre in their hometown of Hambantota.

But the port lost US$300 million in six years and the airport was so unproductive that it could not even cover its electricity bills at one point. Meanwhile, the conference centre cost over US$15 million to build but has remained largely empty.

08:07

The rise and fall of Sri Lanka’s Rajapaksa dynasty

In Kenya, long-serving President Uhuru Kenyatta has his own white elephant: a US$4.7 billion railway project. The train was meant to connect the port city of Mombasa with neighbouring Uganda, ushering in a new era of regional trade. But public debt has stalled the project’s completion and, in 2019-20, one survey found that a whopping 87 per cent of Kenyan respondents believed that their government had borrowed too much money from China.

All told, some 19 emerging economies – ranging from Sri Lanka and Lebanon to El Salvador and Pakistan – are either already in default or on the brink, according to Bloomberg. Many owe some of their debt to China, which means that public anger towards Beijing is also on the rise.

China now has a difficult choice: forgive and restructure a few loans, thereby setting a precedent for its remaining loans, or be firm and see economic partners potentially collapse. Either way, the Belt and Road Initiative is now in distress, and Beijing’s capacity to rescue it has been shrunk by the pandemic.

This year, China’s own total debt is projected to climb to a record 275 per cent of gross domestic product. Much of that is due to the ongoing credit expansion aimed at restarting the struggling economy, according to the director of Beijing’s National Institution for Finance and Development. Yet, far from being temporary, that number has being growing steadily for years, from about 141 per cent at the end of 2008.

02:35

Belt and Road Initiative explained

For Xi, all this is beginning to represent an inflection point in foreign policy. For years, China focused on economic matters both at home and abroad, as it sought to build its strength and bide its time. But as its economic influence encounters roadblocks around the world, there are already signs of a pivot in Chinese diplomacy – pushing it towards geopolitical wrangling and militarism.

Tensions in the Taiwan Strait were running high even before Pelosi visited the island. Following the visit, Japan said that some of China’s missiles landed in its economic exclusive zone near Taiwan.

China’s geopolitical assertiveness has been growing even far from its neighbourhood. A Chinese survey vessel capable of monitoring satellite, rocket and missile launches was recently scheduled to visit debt-ravaged Sri Lanka before the plan was scuttled after protests from India.

China recently signed a contentious pact with the Solomon Islands that would reportedly allow Honiara to request Beijing to send police or military personnel to help “maintain social order”. That agreement came a few months after a mass protest against the Solomon Islands’ government for its decision to cut ties with Taiwan.

But as debt-laden governments elsewhere begin to draw public wrath, such agreements may become more common – not least to protect Chinese investments.

02:17

China confirms signing of Solomon Islands security pact, as US warns of regional instability

The one thing going for Xi so far, however, is that the US has been unable to replace China as an investment partner. Officials in Washington have noted that the US government cannot order private companies to take their money to Kenya or Somalia, as Chinese state-owned entities do.

The West has also suffered some loss of goodwill in the wake of the Ukraine war, as it tries to coerce countries into abandoning Russia. During his trip to Africa last week, US Secretary of State Antony Blinken heard about that from his South African counterpart in no uncertain terms. “One thing I definitely dislike is being told either you choose this – or else,” Naledi Pandor, South Africa’s foreign minister, said.

Xi will also gain from democratic backsliding across Asia and Africa, as those countries balk at depending on Washington. According to Freedom House, as many as 60 countries suffered from declines in freedom over the past year. That many of them are geopolitically crucial countries, such as India and Brazil, opens up strategic space for Beijing.

Yet, despite those opportunities, to keep its global influence expanding in an era of economic distress and political centralisation, China may pursue a more militaristic foreign policy than it ever has.

Mohamed Zeeshan is a foreign affairs columnist and author of “Flying Blind: India’s Quest for Global Leadership”